Rolling Fixed-Term Employment Contracts and the Implications of the Muller case to Sport.
This short essay looks at different employment contracts with a view to gaining an understanding of what a Rolling 12 Month Employment Contract is.
Types of Employment Contract
The Uk Government lists the possible types of standard Employment Contracts on its website as:
- full-time and part-time contracts
- fixed-term contracts
- agency staff
- freelancers, consultants, contractors
- zero hour contracts
The last three do not concern this treatise which is focused on typical contracts for football managers and I’m not concerned with part-time contracts; this leaves me with just two main types of contract, full-time and fixed-term.
Many readers will be employed on what we often think of as a “normal” employment contract where we start work and continue until we either resign or are sacked; when we resign we give notice we will terminate the contract in a given number of days and, unless we are sacked for gross misconduct, our employer will also give us notice when we are sacked.
The number of days that are used as the notice period are written into the contracts and may change with increasing length of service; however a good general period would be 30 days notice.
Thus the “normal” employment contract many of us work under is a full-time contract that can be cancelled as each month goes by and if it isn’t cancelled then it rolls forward into the next month and continues.
We can call this a Full-time Indefinite-term Contract with 30 days’ Notice and they suit employment tasks that are expected to remain unchanged over long periods of time. The word “indefinite” shows how the contract effectively rolls over each month indefinitely unless some other action occurs.
The other type of employment contract many of us are familiar with is one where we start work and continue until a certain date is reached when the contract terminates; as before such contracts can be terminated early by either party if certain conditions occur, such as misconduct, failure to meet targets or a desire of the employee to leave. Often early termination of these contracts requires compensation to be paid even if a notice period is given. In some cases the defined term is not a fixed termination date but continues until a certain task is completed.
These types of contract are generally chosen where employment tasks can be broken down into specific chunks, such as a project or a period of time, and suit some football clubs who employ people on a season by season basis; such a contract would often be a 12 Month Fixed-term Contract.
The EU has allowed FIFA leave to define players’ contracts as fixed-term contracts of multiple years that can only be cancelled under certain specified conditions. These FIFA contracts, along with fixed transfer windows, limit the employees’ freedom of movement but the employees gain by football clubs having more responsibilities towards them, such as being unable to terminate contracts mid-season (except by mutual agreement).
The 12 Month Rolling Contract
This is a contract that is often mentioned in relation to managers and coaches of football clubs and is favoured because it allows a person to be employed for one season during which the fortunes of the club may change; promotion or demotion may, in the club’s eyes be tackled better with a new person in charge, for instance.
The 12 Month Fixed-term Contract is well understood by most people to be one that ends automatically when the season ends but many are confused when the word “Rolling” is included. Many users of social media have said that they interpret a 12 Month Rolling Contract to be a standard Indefinite-term contract as defined in the first section above and the notice period for either party is 12 months, rather than a more normal 30 days.
However, this is not the case: a 12 Month Rolling Contract is a 12 Month Fixed-term Contract, as defined in the second section above, that includes clauses under which each party can ask the other to renew it, or “roll it over”; either party can decide not to renew and there is no obligation on either side to pay compensation in such a case.
Thus, a typical Fixed-term Rolling Contract will normally include a date at which both parties should indicate whether they wish the contract to roll over at the termination date; this will often be set some months earlier than termination rather than being something like 30 days and allows each party sufficient time to find alternative employment or employees.
There is no limitation to what clauses can be added to such fixed-term rolling contracts and it is perfectly possible to add events such as promotion or relegation to the rollover decision.
Of course a normal Fixed-term Contract can be renewed when it ends but the benefit of the Rolling Fixed-term Contract is that both parties declare their intentions well in advance. Many a football manager/coach has been left in limbo until late in the season by indecisive club owners and Chairmen; the rolling contract helps to minimise this by allowing discussions between both parties to occur early and plans to be laid.
The Muller Case
Whilst many of us are very familiar with the contracts mentioned there is an EU Council Directive [directive 1999/70/EC] that has implications for Fixed-term Contracts.
This directive, which applies to all EU Member States, was issued in 1999 but only recently affected football. For a simple explanation, the directive’s purpose is to make Fixed-term employment contracts the exception and tries to ensure they are only used where there are objective reasons that a Fixed-term Contract supersedes the Indefinite-term Contract. In other words, the directive makes the Indefinite-term Contract the norm and fixed-terms can only be used if there are compelling reasons to do so.
A German footballer, Heinz Muller, took his previous club to court in Germany and in 2015 the Court of 1st Instance ruled that Muller’s Fixed-term Contract of Employment failed the test for objective reasons and ruled that the Definite-Term should be replaced by an Indefinite-Term.
This ruling was partially arrived at because Muller’s fixed-term contract had been renewed at least once. The EU Directive treats such renewals as potentially discriminatory and against the interests of the employee. The Directive allows fixed-term contracts where the job the person is employed to do is temporary in nature only; it does not allow a permanent job requirement to be filled by a succession of different people employed on repetitive fixed-term contracts.
This ruling, along with the Directive, had potential impacts for both footballers and managers/coaches employed on fixed-term contracts; the rôle of a footballer doesn’t end when their contract ends, indeed footballers who move on are replaced by new personnel, which makes the fixed-term contract illegal under EU Law for footballers, the same is true for managers/coaches.
The Appeal Court came to the rescue of the football industry: in 2016 it overturned the 1st Court’s decision. Again using my simplification of the ruling, the Appeal Court recognised various specific aspects of football; there are differences between footballers by virtue of the skills they possess and it is natural for a club to have a need for different skills over a period of time, thus “a footballer” doesn’t mean “a footballer” (to borrow and mangle a phrase).
It has not been tested in court yet but it seems logical that football managers/coaches fall under the same (lack of) employment protection; football clubs set a “direction” or “identity” and employ a manager/coach to implement this but the clubs will, from time to time, change “direction” and thus need a new manager/coach.
The EU influences sport in many ways that have yet to be fully played out. In its eyes the sport industry does not have a special place within its laws and all employment contracts must sit comfortably within them. The Fixed-term Rolling Contract sits uncomfortably on the fence of the two German Court interpretations and will do so until an aggrieved, unemployed manager/coach decides to test it.
The uneasy relationship between the EU and FIFA continues.
26/02/2017 Mike Thornton