The 25 man squad rule (part two): what can the 26th man do?

Published 04 March 2012 By: Darryl Taylor

At the start of the 2010/11 Barclays Premier League season, a significant rule was introduced that could have important legal consequences within English football. The Premier League Handbook 2010/11 (Section L) introduced a rule which stated that each Premier League club must submit a Squad List of 25 players. Any players deemed surplus to requirements and who were omitted from the Squad List would not be able to play in any Premier League games until at least the next transfer window.

Any player who aged 21 or under on 1 January in the year in which the season commenced ("Under 21 Players") need not be registered, and would be eligible to play in competitive Premier League matches despite not being included in the Squad List.

Following on from the article "The 25 man squad rule - what happens to the 26th man?", this article further examines the potential causes of action for any players (not being Under 21 Players) omitted from Squad Lists, focusing on compensation and rewards in each case.

Article 14 of the FIFA Regulations of the Status and Transfer of Players (the "FIFA Regulations") : Terminating a Contract for Just Cause

Article 14 of the FIFA Regulations states that "A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause".  Article 14 would have to be used by a player to justify the termination of his contract otherwise both he and his new club could be liable to sanctions under Article 17 of the FIFA Regulations. Despite appearing on the face of Article 14 to constitute "just cause", one can only speculate whether a cause of action under English law would suffice to satisfy 'just cause' before FIFA. However, in any event, it could be argued that if an employment contract has been found to have been terminated under English law, then even before FIFA this would be 'res judicata' ('a matter [already] judged') and 'just cause' under the FIFA Regulations would be found, allowing a player to terminate his contract without sanction.

Constructive Dismissal

Constructive dismissal occurs when an employee resigns in a situation in which he or she is entitled to terminate their employment contract as a result of their employer's conduct (s.95(1)(c) of the Employment Rights Act 1996). By way of an example, a managerial employee, if demoted for no reason, would have a claim against his or her employer for constructive dismissal.

As an employee of a football club, a player, if omitted from a Squad List, may be able to claim constructive dismissal against his previous employer. If a player was successful in claiming constructive dismissal against a club, he would potentially be able to claim damages for both wrongful and unfair dismissal.

Unfair dismissal occurs when an employer terminates an employee's employment contract contrary to the requirements of the Employment Rights Act 1996. While there are a number of potentially fair reasons to terminate a contract, it is suggested that, unless a club could argue that a player omitted from a Squad List is redundant, or unless that player has less than one year's service with that club, then that player would be able to claim for unfair dismissal.

Wrongful dismissal occurs when an employer has breached a term of a contract which has led to the termination of that contract. Clearly, if the omission from a Squad List has allowed a player to claim constructive dismissal, a claim from wrongful dismissal would be inherent in any such claim. Any employee regardless of his length of service can claim from wrongful dismissal.

While there is a statutory cap in compensation under English law for unfair dismissal (£80,400), a successful claim for wrongful dismissal would entitle the player to be compensated for the entirety of monies due to him under the contract. While 'ordinary' employees are only likely to receive monies owed during their notice period, the employment contracts of footballers are unlikely to contain notice periods. Further, football players may also be able to claim for losses of bonus payments and image rights, unlike most 'ordinary' employees.

However, quite apart from the compensation that may be due to a player, if a contract was deemed to have been terminated, the club would be unable to charge a transfer fee for his registration, and the player would be able to freely join any other club. As such, the guilty club could be faced with a substantial 'double whammy' if a player is successful in an action for wrongful dismissal.

Notwithstanding the above, there may be instances where a player would either be unable, or less likely to be able to claim constructive dismissal. For instance, if a player's conduct or bad behaviour had led to his omission from a Squad List, then it is suggested that it is unlikely that an Employment Tribunal would deem that it was the employer's conduct that had terminated the contract or, indeed, that the employment contract had been terminated at all. In any event, it is suggested that, in such a case, an Employment Tribunal would be less likely to side with the player. Further, a successful claim for constructive dismissal would be less likely to succeed for players with long term injuries (such that they would not be able to play for much of the season) or young developing players (not being Under 21 Players) who the club is looking to develop either in the reserves or by loans to other clubs. It could not fairly be said that the employer had repudiated the contract by failing to include such players in their Squad List, as one would not expect them to be included (with any certainty).

It should be noted that in any assessment of damages for wrongful dismissal, an employee will be expected to mitigate his losses. If a player could reasonably have found work elsewhere (as a football player), any compensatory award will be reduced by the amount that he could have earned has he signed with another club. However, a player will not be expected to accept any offer of employment and due to the transfer window system which operates in football, may not be able to do so.

In any event, for healthy established players, clubs must weary of claims for constructive dismissal.

Unilateral Termination

As is clear from recent cases such as Heart of Midlothian v Webster & Ors (CAS 2008/A/1298-300), Essam El-Hadary v FIFA & Al-Ahly Sporting Club (CAS 2009/A 1881), Fenerbahçe Spor Kulübü v Stephen Appiah (CAS 2009/A/1856/1857) and Shakhtar Donetsk v Matuzalem & Ors (CAS 2008/A/1519-20) player have, albeit unlawfully in some cases, been able to terminate their contracts unilaterally. The important point to note in these cases is that, although compensation has been due to the previous club (as it was in El Hadary), the Court of Arbitration for Sport (the "CAS") has accepted that transfers have taken place and the players have successfully moved from one club to another.

It is especially interesting how compensation figures were reached in both the El Hadary and Appiah cases. The CAS applied the Swiss Law principle of positive interest, which provided the following formula:

Cost to replace player - Cost of player (had contract been fulfilled) = Compensation

This approach reflects English common law principles of contractual breach, which seeks to put the innocent party into the position it would have been had the contract been properly performed.

For a first team player at any club, the cost of replacement would normally outweigh contractual cost. As such, compensation would clearly be payable and could be substantial. However, a player who is omitted from a Squad List is, by definition, unwanted. This is a clear distinguishing factor from cases such as El Hadary, where the player has been a key asset to the club. It therefore stands to reason that there would be no cost in replacing a player that had been omitted from a Squad List (as that player would not be replaced) and the club would only be saving money by not having to pay the wages of that player until the expiration of his contract. Accordingly, if positive interest, or English law principles were applied, a club should be unable to claim compensation because, overall, it would be seen to have benefited.

While the El Hadary case provides some reassurance to clubs that they will be able to claim compensation for their key players, for those who are unwanted, it could be an entirely different situation altogether.

A successful claim of unilateral termination would allow a player to leave his club and join any other club on a free transfer. However, interestingly, as a matter of English law, if grounds could be made out for constructive dismissal, the player could additionally claim against the club as above. This was not a factor at play in either Appiah or El Hadary and would be a unique consideration in cases involving English law. (though any such compensation would be ordered by an Employment Tribunal as opposed to FIFA).

Despite this, as above, for players with long term injuries and young developing players (not being Under 21 Players), it would clearly be inappropriate to seek unilateral termination. For any such player, the cost of his replacement is likely to be more than the cost of that player had his contract been fulfilled as, unlike a player who has been omitted from a Squad List, that player could not reasonably argue that he is unwanted and would not be replaced. Michael Essien, for instance, was not included in the Squad List of Chelsea FC during the period September 2011-January 2012. Further, in such circumstances, the previous club would be able pursue the player directly or his new club (if any) for a sum representing its loss (Article 17 of the FIFA Regulations). It is clear from FIFA case law that such liability can extend for an unlimited time. Further, under Article 17, the player may be subject to a ban of up to 6 months and his 'new club' may be prohibited from registering any new players for two transfer windows.

Contractual Frustration

Any contract, including an employment contract, may be frustrated where, without fault of either party, certain obligations can no longer be performed.

While a more unlikely cause of action than either constructive dismissal or unilateral termination, it is conceivable that constructive frustration could be pursued. If frustration was found, the player could treat the contract as terminated and walk away from the club. While a successful claim of contractual frustration would not attract compensation as with wrongful and unfair dismissal (as the contract is essentially deemed to be void), again the club would not be able to receive any transfer fee and the player would be free to join any other club.

Article 15 of the FIFA Regulations : Terminating a Contract for Sporting Just Clause

Notwithstanding the above, Article 15 of the FIFA Regulations, otherwise known as the 'Sporting Just Clause', permits an 'established' player to terminate his contract if he has been used in less than 10% of the official matches of his employing club over the course of a season.

As mentioned in Part 1 of this article, any player who is omitted from a Squad List could potentially terminate his contract under the Sporting Just Clause, however two factors stand in his way. First, just because a player is omitted from a Squad List does not mean that he is ineligible to play in FA Cup, League Cup or European matches. As such, the 10% threshold could still be surpassed, notwithstanding that the player has been omitted from the Squad List. Second, and importantly, under the Sporting Just Clause, a player will only be able to terminate his contract once the season has ended. As such, unlike the other causes of action outlined above, the player would have to wait to make a claim. This would not be the case if a contract was terminated for 'just cause' under Article 14 of the FIFA Regulations.

The commentary which accompanies the FIFA Regulations indicates that only certain players will be able to terminate their contracts under Article 15. As above, injured players and young players (not being Under 21 Players) are less likely to be able to invoke the Sporting Just Clause, despite such matters being decided on a 'case-by-case' basis. The commentary makes it clear that any injuries that a player suffers are unlikely to assist him in making a claim under Article 15. Further, and in relation to young players (not being Under 21 Players), an important consideration is whether or not that player is training with more experienced players in an aim to develop his skills. In any event, such players are unlikely to be seen to be 'established', as in required under Article 15. In such circumstances, notwithstanding that a player has been omitted from a Squad List, that player will be unlikely to be able to terminate his contract under Article 15 of the FIFA Regulations.

Conclusion

Clearly there will be a case to answer for a club who omits a player from its Squad List. Under English law, any such omitted player may be able to claim constructive dismissal, or otherwise seek to terminate his contract. Constructive dismissal would be a particularly potent claim for such a player as, if founded, the club would no longer be able to charge a transfer fee for his registration and the player would be likely be able to make a substantial claim based on his losses of earning (subject to mitigation).

Despite cases like El Hadary providing reassurance for clubs that they will not lose their best players without adequate compensation should they seek to terminate their contracts unilaterally, one can clearly distinguish a situation where a player has been omitted from a Squad List, from cases such as El Hadary. On the basis on which compensation has been calculated in the unilateral termination cases thus far, it is unlikely that any compensation will be due for a healthy and established player who had been omitted from a Squad List, should that player seek to terminate his contract unilaterally.

However, as a final point, and notwithstanding the above, it is possible that FIFA would be unwilling to allow a player to terminate his contract as a result of his omission from a Squad List under Article 14 of the FIFA Regulations, as it is arguable that Article 15 of the FIFA Regulations covers such circumstances, with the only caveat being that such a player must wait until the end of a season to terminate his contract. In any event, to be able to answer this question definitively would require a player to seek to terminate his contract via one of the causes of action outlined above. We wait...

Darryl Taylor of Squire Sanders can be found on LinkedIn and contacted by email at This email address is being protected from spambots. You need JavaScript enabled to view it. and by telephone on +44 207 655 1000.

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Darryl Taylor

Darryl Taylor

Darryl is currently a trainee solicitor at Squire Sanders (UK) LLP. In his time at the firm, Darryl has been involved with the provision of advice on sporting regulations and has also assisted in a wide range of litigious matters, including various high-profile doping defences.