The Employment Rights Act 2025 will significantly increase the risk posed by unfair dismissal claims, transforming them from a mid-range concern into a major financial threat for football clubs. As a result, clubs will need to rethink how they manage exits at all levels.
The government has confirmed that the six-month unfair dismissal qualifying period will come into force on 1 January 2027. From that date, employees with six months’ service or more will have statutory protection. In addition, the current cap on unfair dismissal compensation (the lower of a year’s pay or £118,223) will be removed.
These changes are likely to have a significant impact on football clubs. This season alone has seen numerous high-profile dismissals, including Enzo Maresca and Ruben Amorim, who were dismissed by Chelsea and Manchester United respectively. Once the new regime is in force, clubs will need to carefully reconsider both how they dismiss managers and the potential cost of doing so as the removal of the compensation cap creates the possibility of uncapped, high-value awards.
Historically, the statutory cap on compensation which can be awarded meant unfair dismissal claims often lacked commercial appeal to pursue for players and managers, making them a relatively low-risk issue for clubs. As a result, managers typically relied on breach of contract claims instead, as those claims are free from a cap. Removing the cap fundamentally alters the position. For high-earning managers (of which the vast majority are), unfair dismissal claims will become far more attractive, with compensation no longer limited, and a significant risk for clubs.
The reduction of the qualifying period for unfair dismissal claims to six months is also significant. Given that the average tenure of a football manager is often between 15 and 18 months, far more managers will now fall within the scope of unfair dismissal protection and be eligible to bring claims.
Clubs will therefore need to exercise greater care when dismissing managers. Decisions will need to be supported by clear reasons and robust, documented and formal processes to mitigate the risk of costly claims. Fit-for-purpose performance management procedures will be essential, including clearly setting out expectations from the outset. But is this practical for football clubs who have always operated in a very different way to almost every other industry when it comes to compliance (or not!) with UK employment law.
These changes also have important implications for academies. Young players typically sign one-year contracts with the hope of progressing to professional status. Where a club decides that a player will not progress, the common approach has been to allow the contract to expire. Under the new regime, such players may qualify for unfair dismissal protection, making record-keeping and rational, documented decision-making increasingly important.
Overall, the changes are likely to make it more difficult and more expensive for clubs to release managers and players on short-term or initial contracts, as individuals will reach the unfair dismissal protection threshold much sooner. This article focuses on football clubs, however the changes will also have a significant impact on all employers across all industries in UK. Whether you are a football club or another business we recommend reading our article – Employment Rights Act 2025: What Employers Need to Know or speak to a member of our Employment Law team by emailing: employment@dtmlegal.com
This article is for general information only and does not constitute legal advice.
