Another January transfer window has passed and the media speculation about who is going where has settled down until the summer. In comparison to previous years, January 2016 did not see too many well-documented ‘massive signings’ but once again teams across the four English leagues have taken a punt on a player or two in an attempt push into higher league or avoid the trap door.
Last Minute Appointments
With the promise of untold riches and the fear of significant financial losses it is unsurprising that owners will gamble on a last minute panic buy or managerial appointment. The managerial merry- go-round is played out very much in the public eye but in fact recruitment mistakes occur on a daily basis all over the UK.
What if your last minute panic appointment does not turn out to be as impressive in practice as at interview? What if it transpires after a short period of time the employee simply cannot cut the mustard?
It is important that employment contracts protect the clubs’ long term interests and do not leave them exposed to the financial consequences of a failed last minute purchase that aimed to satisfy supporters and shareholders.
The Manchester United Approach
When Manchester United appointed David Moyes as their manager in July 2013, the fixed period contract of 6 years indicated a long-term plan and a desire for ongoing stability in the post-Sir Alex Ferguson years.
On the face of things a lengthy contract given to a critically acclaimed young manager was likely to appeal to shareholders. However, the contract included a 12 month notice clause (“break clause”) that enabled the club to terminate Moyes’s employment before the fixed term period expired and therefore avoid a costly solution to poor performances on the field.
The significance of the notice clause meant the payment that Moyes was due upon termination was reduced to a 12 month period at a reported annual salary of £4.5 million.
Protect Your Interests
Including contractual protection to assess and deal with poor performance and to be able to terminate the contract is essential for SME’s. Owners/managers focus on the day to day financial health of their business and they are rarely HR specialists. However, including contractual provisions such as probationary periods, right to pay in lieu of notice, garden leave, restrictive covenants, confidentiality clauses and appropriate length notice period clauses are important things to consider should an appointment not meet the employer’s expectations.
Additionally, fixed term contracts are common in the football world and one which expires automatically at the end of the term without the need for notice or allows for early termination on notice before the expiry of the fixed term are alternatives that an owner/manager of an SME may wish to consider.
Have a Staff Handbook
It is also important for SME’s to have a Staff Handbook containing a suite of policies and procedures for dealing with various workplace issues fairly such as poor performance, sickness absence or discipline or grievance issues. Failure to follow a consistent and legally compliant approach to dealing with such issues can often result in a successful unfair dismissal claim which can attract compensation up to £78,355.
Some key considerations are;
- Ensure written contracts of employment are in place and that the contract includes a full range of protective clauses to facilitate termination if needed.
- Ensure the new employee has their terms and conditions in writing within two months of starting their work as this is a legal requirement and a tribunal claim can be pursued for failure to do so.
- Consider at the start how the job might evolve and remember to update contracts (often senior managers who have been with a business for many years still have their original written contract from the start of employment which were drafted for a junior employee and therefore provides no protection for the business now should they leave).
- Remember, if the employer does not provide employees with express written terms then the parties are reliant upon any verbally agreed terms or terms that arise through custom and practice. However, this becomes very murky and open to dispute and costly litigation. Issuing written contracts of employment is therefore essential to protect the business.
- Finally have a comprehensive Staff Handbook in place to deal fairly with workplace issues and therefore avoid tribunal claims.