Professional football players' reservation right when merging of Norwegian football clubs
1 Introduction
The Football Association of Norway (NFF) has established a practice that allows two or more clubs to join forces and, on specified terms, continue to compete at the level for which the clubs are sportingly qualified.
NFF and FIFA have established that employment contract between a football club and a player should be temporary, with a maximum length of five years for players over the age of 18, and a maximum of three years for players between 15 and 18 years. Such a temporary employment relationship deviates from the starting point in Section 14-9 (1) of the Working Environment Act, that an employee shall be appointed permanently, and the same rule has an exception for "athletes, sports trainers, judges and other leaders in the organized sport". NFF has drawn up a standard contract for professional football players and requires this to be used. The contract states that the employment contract is non-terminable, unless termination takes place in accordance with specified terms. A consequence of this is that if a professional football player under contract wants to change clubs, this requires the club and player to agree to terminate the player contract. This usually means that the club makes a financial claim to release the player from the contract, which in turn requires that someone, usually another club, accepts to pay the club's claim, often referred to as a transfer fee. The special relationship between club and player, in the context of the practice of paying a transfer fee for a player under contract, means that a professional football player under contract may have a right of reservation in the process of merging clubs according to the Working Environment Act rules on business takeover. Furthermore, the consequences of invoking the right of reservation must be clarified.
2. Business takeover
Business takeover is defined in Section 16-1 (1) of the Working Environment Act, which sets out three cumulative conditions for the existence of a takeover:
1) There must be a handover of a business or part of a business.
2) The handover must be made to another employer
3) The handover must involve the transfer of an independent entity that retains its identity after the transfer.
By a typical merger of two or more clubs into one new club, there will rarely be any doubt that the first two conditions are met. However, there may be cases where merging clubs retain the identity of one club, for example by continuing the club with the same organization number, club premises and club colors. In that case, the acquiring club and its players will not initially be affected by the rules of business takeover. Regarding the condition that the handover must involve the handover of an independent entity which retains its identity after the transfer, this requires some elaboration. A crucial element in this assessment is that new acquirer mainly exercises the same activity as the transferor, and that assets (including personnel) enable the activity that was transferred. According to jurisprudence relating to The Working Environment Act, and jurisprudence from the European Court of Justice, the following factors will be relevant for the assessment of whether the identity requirement is met:
• the type or nature of the business or business before and after the handover
• whether physical assets have been handed over, such as the company's premises, equipment and other movable property
• the value of intangible assets at the time of takeover (including goodwill)
• the extent of the takeover of the workforce
• If the clientele is taken over
• To what extent the economic activities before and after the transfer are the same
• how long the business operation has been suspended
A ruling from the Supreme Court of March 2010 shows that the threshold for what is considered a business takeover is somewhat lower than the wording should indicate. The question in that case was whether the change of supplier of ground services at an airport was to be regarded as a business takeover pursuant to Section 16-1 of the Working Environment Act. The Supreme Court concluded that the change of supplier of ground services meant that there was a business takeover, as a result of the majority of the employees of the original company being employed by the new company. The Supreme Court further stated that the requirement that the business must have preserved its identity after the transfer was fulfilled. It was shown here that the services that were performed to a large extent were the same as before, that the clientele was essentially the same, that approx. 70% of the employees were taken over and that the business was run from the same premises and with the same infrastructure. In the case of a club merger, the condition that the business must have retained its identity after the takeover is likely to be fulfilled where the new club essentially exercises the same activity as the merged clubs, where the transfer of assets, including football players, enables the activity being transferred.
3. The consequences of a business takeover
If there is a business takeover, the main rule is that the employees' working conditions, including duties and rights that exist at the time of transfer, are transferred to the new employer, see § 16-2 (1). For a professional player under contract, this means that the player is entitled to retain salary and other conditions as stated in the contract, and also that he / she is obliged to continue his work for a new employer / club during the contract period. A modification to this main rule is the right of reservation, which is statutory in aml. § 16-3. The right of reservation is the employee's right to reject the transfer of the employment relationship to a new employer during business takeover.
3.1. Reservation right
The employee has the right to continue his employment with the new employer, but also a right to oppose or reserve against the fact that the employment is transferred to a new employer. The Working Environment Act's rules on right of reservation, Section 16-3, is based on the EU Council Directive 2001/23 / EC of 12 March 2001, so that the directive and practice of the European Court of Justice will have an impact on the interpretation of the working environment Act. The case law of the European Court of Justice shows that the rules are based on a view that an obligation for an employee to be transferred to a new employer will be contrary to fundamental rights. The Katsikas case states:
"Such an obligation would override the employee's fundamental rights, since he must be free to choose his employer and cannot be obliged to work for an employer he has not chosen himself"
Although a player in principle has a non-terminable temporary contract, he / she will likely have a reservation right in line with other employees, as no indications have been given in law or are preparing for such employment to fall outside the reservation right. Section 1-9 of the Working Environment Act further stipulates that the Act cannot be derogated from for the benefit of the employee unless this is specifically stipulated, and no such exception exists for the rules on reservation right.
3.2. Consequences of exercising the reservation right
Since a player's contract is basically non-terminable, and NFF's and FIFA's regulations set strict conditions for a player to be able to be released from the contract, it will affect the player's right to the opportunity to play for a new club if the exercise of the right of reservation is to be considered as a resignation from the player or not. The starting point in FIFA's regulations, FIFA's Regulations on the Status and Transfer of Players art. 13, a contract can only be revoked where the parties agree (mutual agreement) or at the expiry of the contract. In relation to rights through business takeover, there are two exceptions that are important in particular. Firstly, both parties can by art. 14 terminate the contract without any consequences, if there is just cause. What should be considered as "just cause" must be considered in concrete terms, but practice from the FIFA Dispute Resolution Chamber (DRC) and the Court of Arbitration for Sport (CAS) shows that the threshold for what is considered "just cause" is high, and more stringent than the Working Environment Act's protection against unfair dismissal by aml. § 15-7. The other important exception is that a player will be able to terminate the contract if there is "sporting just cause". Unlike termination by "just cause", termination by "sporting just cause" involves certain potential financial sanctions. NFF's transfer regulations are based on FIFA's regulations, and contain the same conditions for termination. Following the transfer regulations, the consequence of the player terminating the contract without there being a justified reason is that the player can become liable for compensation and be imposed on sporting sanctions. Since the potential consequences of the exercise of the right of reservation could be very intrusive to the player, it is of great importance if the exercise of the right of reservation is to be regarded as a termination by the player, or if a termination by the player is to be considered justified.
The Working Environment Act does not explicitly answer whether the exercise of the reservation right shall be regarded as a termination by the employee. The Working Environment Act also makes no demands on the content of a dismissal, in addition to being in writing. This means that the requirements of the Working Environment Act regarding the content of a dismissal do not preclude that the exercise of reservation rights can in principle be regarded as a termination by the employee.
The issue is also not dealt with directly by the courts, but a judgment from the Supreme Court in 2006 can be taken to income for a view that where the employee makes use of the reservation right, the employee will not be considered responsible for having terminated the employment relationship. In that case, the issue of non-compete clauses was still valid after employees resigned from their positions as a result of reorganization in the business. Pursuant to section 38 of the contract law act, a competition clause will not be binding if the employer has terminated the employee without having reasonable reason to do so. The Supreme Court concluded that the competition clauses could not be considered binding.
3.3. Exercise of the reservation right and registration in a new club
If a player exercises the right of reservation the employment relationship ends at the time of the takeover. Whether the player can be registered in a new club depends on whether the exercise of the right of reservation is to be regarded as a termination by the player, and, if so, if the termination was justified.
3.3.1. The reason to report a new club:
The transfer regulations have the following alternative ters for a player to be able to report a new club:
• The player's contract with the previous club has expired or
• The player and the current club have entered into a written agreement to terminate the current contractual relationship or
• The player has been satisfied that the contract with the former club has been rightly stated or
• The contract is rightfully cancelled.
The rules do not regulate termination of employment as a result of the exercise of the reservation right directly, and whether the conditions for a player to be able to register for a new club are present, must be interpreted in concrete terms. If the club refuses to sign a termination agreement, the question will be whether the contract is deemed to have expired, or if the contract has been lawfully terminated. The parties may also ask the Norwegian Football Association to decide whether the contract is lawfully terminated and whether the player will be able to report a change to a new club, a decision which in that case can be brought before the Football's Court of Arbitration.
3.3.2. The question of whether a player’s termination is justified
As stated above, there are indications that the exercise of the right of reservation should not be regarded as a termination by the employee. If the termination of the employment as a result of the exercise of the reservation right is nevertheless regarded as a termination by the employee, it can be questioned whether such termination is justified.
According to the transfer regulations, only "just cause" and "sporting just cause" can justify a player's termination. The condition that there must be just cause is based on Swiss labor law, which in many ways corresponds to the requirement for factual reason in the Working Environment Act. However, just cause will only exist if one of the parties has breached its obligations. Termination due to the need for downsizing is thus excluded, although this may be regarded as factual reason according to the Working Environment Act. The commentary on FIFA's transfer regulations and extensive practice from DRC and CAS shows what is needed for one of the contracting parties to be able to terminate the contract with just cause.
A valid sporting just cause will exist if "sporting considerations indicate that it is unreasonable for the player to remain tied to the club". Whether there is a valid sporting just cause, must be considered in concrete terms. As previously mentioned, NFF will not register the player for a new club if there is a dispute as to whether termination by the player meets the requirements of a sporting cause, unless NFF believes the opposition from the club is obviously unfounded.
