Key difficulties lawyers can face when trying to settle high profile sports employment disputes

Published 04 March 2016 By: Libby Payne

Eva_Carniero

Unlike most employees, those involved in sport do not always have the luxury of their performance and actions being assessed and discussed in a private meeting with their employer. They are often required to comment after every victory or defeat and can face intense media speculation about their future.

As such, when an employment dispute arises, it can prove difficult to keep it out of the public eye. Whilst the vast majority of employment disputes settle prior to a Hearing,1 the publicity factor in sports-related disputes, together with a number of other factors, can make them more difficult to settle without a Hearing.

Accordingly, this article examines the principal difficulties that employment lawyers may face when trying to settle high profile sports employment disputes. To help illustrate the points, the article will draw upon the case of Dr. Eva Carneiro, the former Chelsea FC first team doctor, whose claims against the club and Mr. Jose Mourinho are, as far as we are aware, yet to settle (although it appears a judicial mediation has been scheduled for 7 March 2016 to seek to resolve matters2). The background to the Carnerio case and her potential claims can be read here.3

 

Press coverage of the events and ensuing dispute

Press coverage is a common feature of high profile sports employment disputes, and can be an important element in whether the claim can be settled without a Hearing.

The reason for this is that, in normal cases, both the employer and employee will usually want to avoid a Hearing, as the findings of a Hearing are public and each party will want to avoid the associated risks of negative publicity. This is true even if a party believes they will – and ultimately does – achieve a successful outcome, as media representation can still be skewed and can still linger. This generally incentivises both sides to try to settle before a full Hearing.

Where, however, the incident leading to the claim has already been played out live to the public (as we have seen in Carneiro case), such an incentive disappears. In these circumstances, having a public judgment confirming that the party did nothing wrong can be, or appear to be, the best way for an employee or an employer to overturn any negative public perception.

Although not sports related, a good example of this can be seen from the claim brought against Amshold Group Ltd by Stella English following her appearance in the TV show ' The Apprentice'.4 Having won the show, Ms English was given a contract at Viglen, from which she resigned after just five months. She was then found a role at YouView but also left this after a few months. Ms English brought a claim for constructive unfair dismissal alleging that the roles she had ben given were a sham and that she had been marginalised. Alan Sugar strongly believed that every effort had been made to integrate Ms English at both Viglen and YouView and that both were genuine roles and opportunities for her. Lord Sugar ultimately was not prepared to settle this claim and was determined to be vindicated by the Tribunal, which he was.

 

The value of the claim

If the claim is low value, there is little benefit to either the employer or employee in fighting it, as the legal costs involved will quickly become disproportionate to the amount in dispute. As the value of the claim increases, however, the costs of litigation reduce as a proportion of the disputed amount, thus making it a more tenable strategy.

Salaries and bonuses in top-flight sports can be relatively high compared to the national average. This, coupled with the widespread use of fixed term contracts and a relatively small market for re-employment, means that the value of claims based on loss of income can be substantial.

Having said that, under section 124 Employment Rights Act 1996, unfair dismissal claims are currently capped at the lower of a year's salary or £78,335.5 This means that there will need to be another head of claim (e.g. breach of contract or discrimination) in order to attract compensation that more fully reflects the extent the employee’s losses. Claiming under one or both of these additional heads is a common tactic even if the discrimination or breach of contract claim is not as strong as the unfair dismissal claim, as it can still act as significant leverage in the settlement negotiations.

For example, Kevin Keegan brought a breach of contract claim against Newcastle United in 2009 (albeit before the Premier League Manager's Arbitration Tribunal and not the courts) seeking around £25m in respect of loss of earnings to the end of his contract, and beyond.6 The claim didn’t settle and went all the way to a Hearing, and in the end he was awarded a mere £2m thanks to a liquidated damages clause within the contract.7 One can see from this example that in a high value claim, parties can have a far greater incentive to run with the dispute and risk a Hearing, rather than settle. This is especially true if their respective positions on an acceptable settlement figure are a significant distance apart.

In Carneiro's case, her annual salary is in the author's view likely to be well in excess of the statutory cap for compensation in unfair dismissal claims. However if she has also brought claims for discrimination, personal injury and aggravated damages (as seems plausible),8 and if these claims are successful, then her potential compensation will not be subject to the statutory cap.

Claiming against an individual respondent in addition to the employer

Raising a claim against an individual respondent for discrimination, in addition to a claim against the employing entity, can be a useful tactic in any employment claim.

Where the individual respondent is a fellow employee, it can put additional pressure on the respondents to settle, particularly where the individual is senior and not minded to give evidence at a Hearing. It is also shrewd tactic where the employer may be insolvent, as it increases the employee’s chances of recovering something.

Often, the employer respondent simply stands behind the individual respondent and the case proceeds in much the same way as if there was no individual respondent.

However, if the individual and employer have parted company, or disagree on the approach to the matter, it can make it harder to settle. The individual may insist on clearing their name, or may turn against the employer. The employer could settle the employee's claims against it, but unless the claimant also agrees to withdraw claims against the individual, those claims could proceed.9 This is very risky for they employer, as they will not be involved in the Hearing and may not be able to rebut anything detrimental said against them by either the claimant or the individual respondent.

Another complicating factor in this scenario is agreeing a public statement. Public statements commonly accompany private settlements in high profile cases that have caught the attention of the press, as they help to draw a line under the matter for all involved and limit speculation. Regardless of the position between the individual and employer respondent, getting three parties to agree a statement can be difficult. Where there is acrimony between the individual and employer respondents, this is even harder.

In relation to Dr. Carneiro’s case, it was confirmed in November that she was also pursuing Mr Mourinho in addition to her contractual employer, Chelsea FC. There is speculation10 that Mr. Mourinho agreed to accept a reduced payout from Chelsea on the termination of his employment as a result of the Carneiro matter and specifically because Chelsea alleged Mr. Mourinho's conduct breached his own contract with the club. There is also a suggestion11 that Mr. Mourinho has been given an indemnity by Chelsea in respect of the proceedings. As such, the claim against Mr. Mourinho may not be as significant a factor, but agreeing a statement in the event the matter is settled could still be a stumbling block.

Another good example is footballer, Mark McCammon's, claim against Gillingham FC. Following his dismissal from the club in 2011, Mr. McCammon brought a claim against the club and included club Chairman, Paul Scally, as a second respondent. In the case, Gillingham FC dismissed Mr. McCammon for gross misconduct, but one of the reasons given for the dismissal was that he had made serious allegations of race discrimination. It was the case that Mr McCammon had accused the Club of race discrimination. Where an employer dismisses an employee for raising concerns of discrimination, it is likely to be found that this constitutes victimisation and is therefore discriminatory. Gillingham alleged that it was not the content of the allegations that they took issue with, but the way the allegations were made, which they said was aggressive. Ultimately, the claim didn't settle, Mr. McCammon was successful at the Employment Tribunal, and the club and Chairman were unsuccessful in an appeal.12

 

Reinstatement

As discussed above, damages for unfair dismissal are capped by statute and, where an employee is well paid, compensation may be equivalent to just a few months' salary, even where the employee is out of work for a lot longer.

Tribunals do have the power to order that the employee be reinstated13 to their previous role, or re-engaged14 in a similar role. If reinstatement or re-engagement is ordered then typically arrears of pay and benefits up to the date of the Hearing are paid and the employee will return to work.

In deciding whether to order reinstatement, the Tribunal must determine if it is 'reasonably practicable' to do so.15 If the employer does not agree to take the employee back as ordered, then a further award of between six and 12 months can be ordered.16 Reinstatement or re-engagement orders are very rare, being awarded in less than 1% of cases.17 This is in part due to claimant's not seeking reinstatement as often they do not want to return to the same workplace, but also because trust and confidence between the claimant and employer has often irreparably broken down by the time the remedy is determined. Where they are sought, and particularly where they may be awarded, the level of compensation needed to settle the claim could well be higher.

Dr. Carneiro is reported18 to be seeking reinstatement and so this could well be a factor affecting any potential settlement. That Mr Mourinho is no longer employed by the club and no permanent replacement doctor appears to have been hired19 are factors that will assist Dr. Carneiro in seeking reinstatement. However, as Chelsea have not offered Dr. Carneiro her job back to date, the author expects that Chelsea will seek to avoid this order (and the added cost of complying (or not complying) with it) and, to support their position, will point to other factors, such as that there were issues between Dr. Carneiro and members of staff other than Mr. Mourinho.

 

Strength of feeling

This should not be underestimated, particularly where claimants or respondents have funds to pursue the litigation. The desire to prove yourself right and to have your day in court, or just not to give in to the other side can sometimes be hard to get past on both the claimant and respondent side.

Others have more altruistic intentions – the employer not wanting the employee who has committed gross misconduct to get away with it; the employee not wanting the same treatment to be meted out to future employees. Most claimants or respondents will have a price at which they’re prepared to settle, but this may be totally out of proportion with the level of the likely award.

 

Other proceedings

Employment Tribunal proceedings may not be the only proceedings ongoing. A larger contractual claim may be planned in the civil courts, or there may be related proceedings before a regulator – particularly where misconduct is an issue.

Where there are other proceedings either pending, planned or possible, for example in the high court, or before a regulator, having a judgment on key factual matters from the Employment Tribunal can be helpful (or indeed unhelpful). Unlike the civil courts, parties bear their own legal costs and costs awards are only ordered in a very small minority of cases.20

The Employment Tribunal is therefore a relatively cheap and low risk jurisdiction to test the strength of claims. A claimant wishing to pursue matters against an employer with a regulator, or hoping that a regulator will intervene, can find a tribunal judgment a useful starting point to pique the interest of the regulatory body. This can make it harder to settle a claim and sometimes an employer may feel that they cannot make a compensation payment to an employee where there are regulatory matters ongoing, which severely limits the scope for settlement.

The FA have already cleared Mourinho of discriminatory conduct.21 Whether this could be revisited in light of a successful claim by Carneiro is an interesting prospect. Similarly, if Carneiro's claim does succeed, The FA may have awkward questions to answer as to why they took no action against Mr. Mourinho.

Following the conclusion of the respondants’ unsuccessful appeal in the McCammon case, The FA subsequently took action against Gillingham and Mr Scally, issuing fines to both of them. It is not clear if The FA were simply waiting for the outcome of the Hearing before issuing its own charges, or if it was the outcome of the appeal that sparked the charges and had the matter settled at an earlier stage it would never have resulted in a charge by The FA. In any event, The FA were entitled to rely on the factual findings of the Employment Tribunal in their own disciplinary proceedings.22

 

Comment

As we have seen, there are a number of factors that can arise in the context of sports employment disputes that can make them tricky to settle. That said, there will still, in most cases, be a point or a range of compensation, or an overall settlement package, that fits both parties’ objectives. Where this point or range lies often comes to a head just before the Hearing, when the pressure is highest on both parties to settle (rather than risk the unknown) and a ‘bout of reasonableness' may break out.

Judicial mediation can be a good option in cases that are difficult to settle as the parties may be able to get a steer from the mediator as to the strengths and weaknesses of their respective cases. This can prove persuasive and encourage settlement. Unlike a Hearing, the mediation is private, the mediator has no power to make a binding decision (that is down to the parties), and any settlement the parties do reach is also private (unless the parties agree to make it public).

It will be interesting to see if the Carneiro matter goes all the way to a Hearing like the McCammon and Keegan matters, or if they are able to reach agreement at the judicial mediation. At this stage it is impossible to call.

 

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Author

Libby Payne

Libby Payne

A former competitive fencer, Libby is now an equally enthusiastic employment and sports lawyer. She acts for both employers and senior executives and also for sports clubs' agents and athletes. Having a real passion for the law, Libby enjoys coming up with creative and practical solutions to even the most novel issues.

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