On 6 November 2017, FIFA (the world governing body for football) and FIFPro (the World Players’ Union) reached a wide ranging 6 year cooperation agreement to strengthen relationships between the two organisations and improve the governance of professional football worldwide.
Additionally, an agreement was reached between FIFA, FIFPro, the European Club Association (ECA) and the World Leagues Forum under the umbrella of FIFA’s newly formed ‘Football Stakeholders Committee’, which includes confederations, member associations and professional football stakeholders.
Among the improvements agreed were several changes regarding dispute resolution between players and clubs, particularly for decisions in cases of overdue payables, as well as new provisions to avoid the abusive conduct of parties, such as players being forced to train alone. As a consequence of these commitments and the implementation of the agreement, FIFPro withdrew the complaint against FIFA lodged with the European Commission in September 2015.
Some changes had already been enacted in November 2017, with the FIFA transfer system (the FIFA TMS) applying both to male and female athletes, the latter not having been part of the TMS system since its creation.
Nonetheless, on 26 April 2018, FIFA released Circular Letter 1625 introducing the other changes to the FIFA Regulations on the Status and Transfer of Players (“RSTP”) in line with FIFA’s agreement with FIFPro, which are valid as of 1 June 2018.
We analyse these changes below.
New Article 24bis: Execution of monetary decisions
Before the amended regulations, the execution of monetary decisions - be that against clubs, coaches or players - was done under the threat of imposition of disciplinary sanctions by FIFA. This logic remains the same. However, now, when the adjudicatory organs at FIFA (the Dispute Resolution Chamber or the Players’ Status Committee) issue a decision, they shall also decide on the consequences of the failure to pay the relevant amounts in due time.
These consequences shall be:
- Against a club, a registration ban for up to three consecutive transfer windows;
- Against a player, prohibition to play in official matches up to six months.
It is noteworthy that the outlined sanctions will be immediately applicable if the debtor fails to pay the creditor within 45 days of receiving the required bank details, but solely if the FIFA decision is final – which means it was not appealed to the Court of Arbitration for Sport (CAS). Should the debt be paid, the sanctions will be lifted immediately.
The new sanctions can be seen as beneficial to players, as FIFA has increased the potential number of registration periods a club could be subject to a ban from two to three. This streamlined process (i.e. having potential disciplinary sanctions determined at the time of the FIFA DRC/PSC decision) is also a welcome change for all parties (even lawyers!) as previously, parties had to wait for a FIFA DRC/PSC decision, attempt to recover the money awarded, and if they could not do so, go back to the FIFA Disciplinary Committee to request disciplinary sanctions for the debtor for failing to comply with the FIFA decision. The inherent delays in this process was often exploited by debtors to delay payment and frustrate creditors for as long as possible.
Articles 14bis and amended Article 18: Overdue payables provisions
A new Article 14bis has been introduced and this expands – and better defines – the concept of ‘just cause’ under the FIFA RSTP by introducing a rule that enables players to unilaterally terminate a contract if a club unlawfully fails to pay salaries for two months. If a player was to be paid on a monthly basis, then a pro-rata value corresponding to two months shall be considered.
This is a significant, and positive, change for players. Firstly, the RSTP previously had no provision defining ‘just cause’. Secondly, under established FIFA and CAS jurisprudence, ‘just cause’ was generally granted for players if a club failed to pay three consecutive months of salary (however, just cause could have arisen sooner if the circumstances warranted it). The reduction of the period represents a significant win for athletes, since it gives them legal certainty as the rules, unlike before, now define more clearly the conditions required for there to be ‘just cause’.
An exception to the above rules are national collective bargaining agreements, which if validly negotiated in each country which will prevail over the FIFA rules.
The only condition precedent for a player to be able to terminate contract with just cause due to unpaid salaries is putting the club under notice at least for 15 days – there are no more so called ‘grace periods’, which are contractual clauses granting clubs extra time to pay players amounts that have fallen due. Under the new Article 18.6, FIFA shall not recognise such clauses anymore – which represents another win for players as clubs have often exploited grace periods to delay payments to players. The national collective bargaining agreements exception also applies to ‘grace periods’, and any contracts already existing at the time of the new provisions coming into force would not be affected.
Article 14: Abusive conduct
The practice of clubs marginalising players, forcing them to train alone and using otherwise unsavoury methods to force players to accept contractual terminations or pay cuts has sadly been prevalent in lesser known leagues around the world. The Sebino Plaku case in 2016 was a good example.
Under the new Article 14(2), such abusive conduct will no longer be tolerated by FIFA, which is an excellent development for players. This provision was likely a key amendment requested by FIFPro in their negotiations with FIFA. In cases of abusive conduct by clubs, players are now entitled to terminate their contract with just cause. Incidentally, if the player is the party guilty of abusive conduct, based on the wording of the clause the club has the same right to terminate – however one suspects this is a rather unlikely scenario.
It’s not that players did not have the right to terminate their contacts due to abusive conduct previously, they did, and there were decisions at FIFA and the CAS which confirmed this right. However, there was nothing explicitly stated in the FIFA RSTP in this regard. The new Article 14(2) can therefore be seen as a codification of the existing CAS jurisprudence on the matter.
Article 17: New parameters for player compensation
The amendments to Article 17 - one of the cornerstones of the FIFA RSTP and the most frequently cited provision – is likely the most noteworthy amendment of all.
Article 17 sets out the consequences when a party breaches a contract without ‘just cause’. Article 17(1) states as follows:
“In all cases, the party in breach shall pay compensation. Subject to the provisions of article 20 and Annexe 4 in relation to training compensation, and unless otherwise provided for in the contract, compensation for the breach shall be calculated with due consideration for the law of the country concerned, the specificity of sport, and any other objective criteria. These criteria shall include, in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, the fees and expenses paid or incurred by the former club (amortised over the term of the contract) and whether the contractual breach falls within a protected period.”
The general ambiguity in the clause above, in practice, provided FIFA/CAS arbitrators with considerable discretion to calculate the compensation payable in each particular case. This caused significant controversy and debate between football stakeholders regarding the ‘correct’ method to calculate compensation owed to the party who suffered the breach.
Under the new amendments, the above provision remains applicable, however there is now greater certainty regarding how compensation should be calculated, as follows:
- If the player did not sign a new contract with another club following the termination of his previous contract (i.e. there was no ‘mitigation’), as a general rule, the compensation will equal the residual value of the prematurely terminated contract.
- If the player does sign a new contract with another club following the termination, the value of that contract (for the period corresponding to the time left of the previous contract) is deducted from the residual value of the contract as ‘mitigation’. The net value is now defined as “Mitigated Compensation”.
- Further, if the termination was due to overdue payables (discussed above), an additional three months’ salary shall be added as “Additional Compensation” – or potentially up to a maximum of six months’ salary “in case of egregious circumstances”.
- The total compensation calculated above can never exceed the residual value of the prematurely terminated contract – which is reasonable as that would likely amount to unjust enrichment.
As with the overdue payables provisions discussed above, validly negotiated collective bargaining agreements at national level can overrule/deviate the above FIFA RSTP provisions.
Whilst FIFA/the CAS still have a certain amount of discretion under this provision, the clarification of the calculation methodology is a welcome change to the rules as both players and clubs can now have greater certainty as to the consequences of terminating a contract without just cause. The greater clarity will likely also lead to more consistent jurisprudence at FIFA and the CAS.
A FIFPro survey in 2016 of 14,000 footballers working across 54 countries in Europe, the Americas and Africa showed that 41% of players had experienced delayed salary payments over the last two seasons – an unsustainable situation that needed to be addressed.
In that context, the abovementioned amendments are a welcome and positive change in international football regulations. The changes can also clearly be seen as a win for players, as they no longer have to wait as long without being paid to have ‘just cause’ to terminate, can terminate with ‘just cause’ if they are subject to abusive behaviour by clubs, and have greater certainty as to the potential financial consequences of the termination of a contract by either party without ‘just cause’.
It is unsurprising therefore, that FIFPro agreed to withdraw their complaint at the European Commission as a result of FIFA’s acceptance of these changes. Whilst many of the amendments are largely a reflection of existing CAS jurisprudence on the issues, it is nonetheless a positive development that this jurisprudence was explicitly reflected in the FIFA regulations. It will be interesting to analyse the first wave of new cases at FIFA and the CAS under these new rules.
From a broader football governance point of view, it is also heartening to see major stakeholders collaborate for the betterment of the game.
At the announcement of the new changes, FIFA President Gianni Infantino stated:
“Today marks an important milestone in the improvement of the global governance of professional football. I have witnessed unprecedented cooperation between FIFA, FIFPro, the European Club Association and the World Leagues Forum. These were complicated negotiations with the game’s key stakeholders and each one has made some compromises but at the end of the day, this agreement is beneficial for all and the ultimate winner is football. I’m looking forward to seeing the same collaborative approach for the discussions that will start now concerning a broader review of the transfer system. All parties – member associations, confederations, players, clubs and leagues – have an important role to play in this process.”
FIFPro President Philippe Piat stated:
“FIFPro is pleased with the new spirit of cooperation shown by FIFA and its willingness to listen to the concerns of players. This mutual understanding has helped set in motion the biggest changes to football transfer rules since 2001. While clubs in the richest leagues invariably treat players well, there are other leagues in which the employment rights of footballers are routinely ignored. These rule changes will help protect the 60,000 players FIFPro represents against unfair treatment. FIFPro is also pleased that the other key football stakeholders share our view to improve the transfer system in the interests of protecting the health of the game. We look forward to working together on this in the coming weeks.”
In mid-November 2017, in an interview on FIFPro’s website Mr Piat indicated that this could be the first of many new reforms, as FIFPro, FIFA and other stakeholders were “in talks about reforms on many other vital issues such as agents’ roles and fees, player loans, squad size limits, the international match calendar, training compensation, under-age player transfers and transfer window arrangements.”
Whilst the amendments to the FIFA RSTP discussed in this blogpost are not going to eradicate all the issues involved in football labour law and the transfer system overnight, it is certainly a major step in the right direction. Mr Piat’s comments suggest that more significant positive changes are yet to come - so watch this space.
Mills & Reeve specialises in advising players and clubs on regulatory and dispute resolution matters involving FIFA regulations, at FIFA and the CAS. If you require any advice in relation to anything mentioned in this article, please contact Tiran Gunawardena.