F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – players’ and match agents disputes / controversie agenti di calciatori – (2020-2021) – fifa.com – atto non ufficiale – Decision of the Single Judge of the Players’ Status Committee passed in Zurich, Switzerland, on 9 February 2021
Decision of the
Single Judge of the PSC
passed on 9 February 2021
regarding an employment-related dispute concerning the coach René Poms
Stefano La Porta (Italy), Single Judge of the PSC
René Poms, Austria
GNK DInamo Zagreb, Croatia
Represented by Mr Davor Radic
1. On 11 May 2020, the coach and the club concluded an employment contract (hereinafter: the contract), valid as from 1 June 2019 until 31 May 2021 as “assistant coach”.
2. According to art. 3 of the contract, the coach “shall do the job of 1st assistant coach of the senior contestant team of the Club, plan and perform the entire training process, conduct team preparations as well as other activities connected to the team competing in competitions”.
3. Pursuant to art. 6 of the contract, the coach was entitled to receive a monthly remuneration of EUR 19,920 gross “payable in HRK at the middle exchange rate of the Croatian National Bank on the day of invoicing”. In addition, the club undertook to make “the payment of bonuses in accordance with the Club Regulations on bonuses and awards for players and professional football staff”.
4. Art. 6 also further provided that “No value added tax is included in the given amount” and “the Club is obliged to pay each invoice issued by the Coach no later than 15 (fifteen) days after the day of invoicing”.
5. The contract could be terminated in accordance with art. 9 of the contract, which read as follows:
“This Agreement becomes invalid at the end of the abovementioned period, by means of mutual termination, or cancellation or termination by Arbitral Tribunal of the Croatian Football Federation. The Coach agrees to mutual termination of the Agreement in case the Club qualifies for the competition which, according to the rules of the Croatian Football Federation (hereafter: HNS), requires that the job described in this Agreement be done by a coach with higher professional education than this Coach. In such a case, the Club is obliged, unless the contracting parties agree differently, to pay the Coach 25% of the amount which would have been paid out to the Coach until the expiration of the Agreement. “
In case the Club should get relegated to a county level of competition, this Agreement shall be mutually terminated and the Club would be obliged only to fulfil the obligations that were due before the moment of termination.
The Club has the right to unilateral termination of the Agreement, in which case the Coach has no right to any kind of reimbursement.”
6. As to the competence, art. 11 of the contract stipulated the following:
The contracting parties shall resolve all possible disputes amicably, otherwise they agree on the jurisdiction of the Arbitral Tribunal of HNS.
7. On 12 March 2020, the Croatian Football Federation suspended all competitions in view of the COVID-19 pandemic.
8. On an unspecified date, the club informed its staff of a decision of its Board dated 24 March 2020 in order to tackle the covid-19 crisis and by means of which it was decided the following with immediate effect: “Players and coaches will have their salaries paid out the following way: one third of their salaries will be paid out regularly, one third shall be paid out within six months from the date of the next official match played by GNK Dinamo, one third of the salaries will not be paid out, these measures shall come into force immediately and last until 30 September 2020.”
9. On 25 March 2020, the coach wrote to the club, stating that he did not agree with the decision which “was taken unilaterally without any agreement with me; therefore, such a decision cannot and should not have any legal effect on my contractual relation to the Club”. In this context, the coach asked the club to meet its contractual obligations.
10. On the same day, i.e. 26 March 2020, the club informed the coach of its decision to unilaterally terminate the contract pursuant to art. 9 par. 4 of the contract.
11. According to said decision, the club indicated that “up until the day of unilateral termination of the agreement, GNK Dinamo Zagreb paid all invoices based on the Agreement on Professional Coaching from 1 June 2019 in a timely manner to Coach Rene Poms” and that the coach “has no right to financial reimbursement in accordance with Article 9, paragraph 4”. In particular, the club invoked the following reason for the termination: “Due to all mentioned facts and in order for GNK Dinamo Zagreb to secure future operations in the time of an unexpected and unpredictable event (caused by the outbreak of the Coronavirus Covid-19) by rationalising costs (…)”.
12. On 6 April 2020, the coach reminded the club that his salary for March 2020 had not been paid, in particular that “I was asked to cancel the invoice for my monthly salary for March and issue another one in accordance with the Club’s Decision from 24 March 2020”. Moreover, the coach deemed that the club “unilaterally terminated the abovementioned Agreement on Coaching without a valid reason”. In this respect, the coach asked for the payment of his salary of March 2020 within 15 days and warned the club that any disclosure of his earnings would be a breach of the GDPR.
13. On 22 April 2020, the club replied stating that according to art. 9 para. 4 of the contract, it “had the right to unilaterally terminate the agreement with you for any reason, after which you were not granted the right to financial reimbursement”. The club argued that this type of clause is standard for coaches and that he was as such not entitled to any payment following the termination. In addition, the club argued that FIFA RSTP does not apply to coaches and that the applicable Croatian regulations allow this type of termination clauses. Finally, the club acknowledged that it “shall pay you a proportional part of your salary for March (26 days wage), which is the only amount that the Club is obliged to pay you”.
14. The coach informed FIFA that, on 5 September 2020, he concluded an employment contract with the club, NK Osijek, valid as from the date of signature until 30 June 2023.
15. Accordingly, the coach was entitled to a monthly salary of EUR 10,000 (from September to 31 May 2021, the coach would have earned 90,000,. i.e. 10,000*9).
16. On 29 May 2020, the Claimant lodged a Claim before FIFA against the Respondent
17. In his claim, the coach first held that the club undertook to pay his salary “VAT exclusive” meaning “that the Club undertook to pay the VAT to the Coach on top of the aforementioned monthly wage, if applicable”. Therefore, the coach considered that the club was obliged to pay VAT “which calculates to 25% over agreed amounts”.
18. The coach stated that on 29 April 2020, the club paid him part of his salary of March 2020 in the gross amount of HRK 127,141.03 (equivalent of EUR 16,708).
19. The coach explained the situation during Covid-19, stating that the after the suspension of the football league, the first team players continued to train under the instructions of the coaching staff, including him, until 27 April 2020. On this date, the club started with group trainings and regular football activities in view of the resuming of the league on 30 May 2020.
20. In addition, the coach mentioned that upon the unilateral termination of the contract, the club “signed new professional contracts with couple of its first team players” and “hired within the matter of days thereafter completely new coaching staff”.
21. The coach argued that the club did not even try to negotiate in good faith about a possible salary reduction but unilaterally decided to reduce his salary not only for the period of covid-19 but also for the period thereafter. When the club observed that the coach did not accept the unilateral decision, it decided to terminate the contract instead of negotiating in good faith.
22. The coach explained that during the COVID-19 crisis he was still performing his duties as the players were still training on an individual basis.
23. The coach further argued that the financial impact of COVID-19 invoked by the club to justify the termination is void as the club renewed contracts of players, signed new players and employed a new coaching team (8 members) right after the termination of the contract.
24. In light of the above, the coach considered that covid-19 was not a valid reason for unilaterally terminating the contract and that the latter was thus terminated without just cause.
25. With regard to the compensation due, the coach deemed that art. 9 par. 4 is of “potestative” nature since it only allowed the club to terminate the contract.
26. Therefore, the coach requested the payment of the residual value of the contract in the total amount of EUR 356,792.50, broken down as follows:
EUR 285,434 gross as salaries for the period from 27 March 2020 until 31 May 2021;
EUR 71,358.50 as VAT for the same period;
Interest of 5% per year on the aforementioned amounts “starting from the respective date of maturity until the effective date of the payment”;
Legal costs and procedural costs.
27. In its reply to the claim, the Respondent rejected the competence of FIFA on the basis of art. 11 of the contract.
28. In particular, the Respondent considered that the Court of Arbitration of the Croatian Football Federation, as it meets the requirements of art. 22 lit c) of the RSTP. More specifically, the Respondent argued the following:
„There is an independent arbitration tribunal established at the national level“;
The Court of Arbitration of the CFF is an independent arbitration tribunal which was founded at the Croatian Football Federation (national level);
„The jurisdiction of this independent arbitration tribunal derives from a clear reference in the employment contract“
–from the Article 11 of the Professional coaching contract of 1 June 2019 it is evident and it is clear that the Claimant Rene Poms and the Respondent GNK Dinamo Zagreb agreed about jurisdiction of the Court of Arbitration of the CFF;
“This independent arbitration tribunal guarantees fair proceedings and respects the principle of equal representation of players and clubs.“
–The Court of Arbitration of the CFF was established in accordance with the Arbitration Act of the Republic of Croatia, and its structure and operation are prescribed by the Rules of Procedure of the Court of Arbitration of the CFF, which are fully compliant with the minimum standards set out in FIFA Circular Letter No. 1010 of 20 December 2005 and FIFA Standard Rules National Dispute Resolution Chambers (NDRC) of 1 January 2008. The Court of Arbitration of the CFF guarantees fair proceedings as well as the principle of equal representation of players and clubs, and as proof of this we point to the provisions of Article 5 and Article 7 of the Rules of Procedure of the Court of Arbitration of the CFF.”
29. In addition, the Respondent considered that there is no international dimension, insofar the Claimant was, at the time of the filing of the claim, a Croatian citizen.
30. As to the substance, the Respondent argued that, following the COVID-19 pandemic, it proposed a reduction of all the staff’s salary, but that the Claimant refuse to do so.
31. The club confirmed that, on 26 March 2020, it terminated the contract with the same facts to the following staff:
1.Assistant coach Rene Poms (Austria)
2.Assistant coach Nino Bule (Croatia)
3.Assistant coach Martin Mayer (Austria)
4.Assistant coach Silvije Čavlina (Croatia)
5.Assistant coach Karlo Reinholz (Austria)
6.Assistant coach Jasmin Osmanović (Croatia).
32. In this respect, the Respondent explained that Article 7, paragraph 3, item c) of the Rules on the status of coaches of the CFF, which provision of the Rules regulates the possibility of declaring a unilateral termination of the contract.
33. The respondent further noted that, considering the COVID-19 situation, it tried to partially fulfill his obligations to him through the proposed decision of 24 March 2020, but as the Claimant in his letter explicitly refused such performance of the obligations of the Respondent toward him, the Claimant was left with nothing else but to terminate the contract with the Respondent according to Article 373 of the Croatian Obligations Act, which foresees that “in case of partial impossibility of performance of one party due to an event for which neither of the parties is liable, the other party may terminate the contract if partial performance does not meet its needs.“”
34. As to the payable taxes, the Respondent argued that “nowhere in the agreement between the parties does it say that the Respondent is obliged to pay VAT such VAT amount.”
35. In sum, the Respondent considered that the claim is inadmissible and, in the alternative, shall be rejected.
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II.Considerations of the Single Judge of the PSC
1.First of all, the Single Judge of the PSC (hereinafter also referred to as SingleJudge) analysed whether it was competent to deal with the case at hand. Taking intoaccount the wording of art. 21 of the January 2021 edition of the Rules Governing theProcedures of the Players’ Status Committee and the Dispute Resolution Chamber(hereinafter: the Procedural Rules), the aforementioned edition of the Procedural Rulesis applicable to the matter at hand.
2.Subsequently, the Single Judge of the PSC referred to art. 3 par. 1 of the ProceduralRules and emphasised that, in accordance with art. 24 par. 1 in combination with art.22 lit. c) of the Regulations on the Status and Transfer of Players, the Single Judge ofthe PSC is competent to deal with employment-related disputes between a club or anassociation and a coach of an international dimension, unless an independentarbitration tribunal guaranteeing fair proceedings exists at national level. As a result,the Single Judge understood that he would be competent to deal with the presentmatter, which concerns a coach with the Austrian nationality and a Croatian club. In thisrespect, the Single Judge emphasized that the international dimension of the disputearises from the nationality of the parties, and not their country of residence.
3.However, the Single Judge noted that the Respondent challenged the competence ofFIFA to deal with the present matter, noting that the Court of Arbitration of theCroatian Football Federation is competent to deal with the matter.
4.Conversely, the Single Judge observed that the Respondent insisted in the competenceof FIFA.
5.In this respect, while analysing whether it was competent to hear the present matter,the Single Judge considered that he should, first and foremost, analyse whether theemployment contract at the basis of the present dispute contained a clear and exclusivejurisdiction clause.
6.In this regard, the Single Judge noted that art. 11 of the contract stipulated thefollowing:
“The contracting parties shall resolve all possible disputes amicably, otherwise theyagree on the jurisdiction of the Arbitral Tribunal of HNS.”
7.In this respect, and after analyzing the contents of the aforementioned clause, theSingle Judge agreed that the clause at stake indeed refers to the Arbitral Tribunal ofHNS, but does not refer to said decision-making body as having the exclusive jurisdictionto deal with the matter. Thus, given the non-exclusive nature of the aforementionedclause, the Single Judge understood that the parties mutually admitted that any disputearising from the contract at stake could be referred to other competent bodies, such asthe Players’ Status Committee.
8.On account of all the above, the Single Judge established that the Respondent’sobjection towards the competence of FIFA to deal with the present matter has to be rejected, and that it is competent, on the basis of art. 22 lit. c) of the Regulations on the Status and Transfer of Players, to consider the present matter as to the substance.
9.In continuation, the Single Judge of the PSC analysed which edition of the Regulationsof the Status and Transfer of Players should be applicable to the present matter. In thisrespect, the Single Judge of the PSC confirmed that in accordance with art. 26 par. 1 and2 of the Regulations on the Status and Transfer of Players, and considering the datewhen the claim was lodged, the June 2020 edition of the aforementioned regulations(hereinafter: the Regulations) is applicable to the matter at hand.
10.With the above having been established, the Single Judge of the PSC entered into thesubstance of the matter. In doing so, it started to acknowledge the facts of the case aswell as the documents contained in the file. However, the Single Judge of the PSCemphasized that in the following considerations it will refer only to facts, argumentsand documentary evidence which it considered pertinent for the assessment of thematter at hand.
11.In this respect, the Single Judge noted that the parties concluded a contract valid asfrom 1 June 2019 until 31 May 2021.
12.Subsequently, the Single Judge observed that the Claimant lodged a claim before FIFAagainst the Respondent, arguing that the club unilaterally terminated the contract on26 March 2020, following art. 9 of the contract.
13.Conversely, the Single Judge took note of the Respondent’s position as to the substance,according to which it fundamentally admitted that it terminated the contract incompliance with its art. 9 and the applicable regulations.
14.In view of the above, the Single Judge therefore understood that the main legal issueat stake is to determine whether the Respondent had any just cause to unilaterallyterminate the contract.
15.Within this context, the Singe Judge wished to refer to the paramount importance ofthe principle of maintenance of contractual stability, which is a fundamental part of theRegulations.
16.Moreover, the Single Judge wished to emphasise that, following the longstandingjurisprudence of the Players’ Status Committee as well as of the Dispute ResolutionChamber, only a breach or misconduct which is of a certain severity justifies thetermination of a contract. In other words, only when there are objective criteria, whichdo not reasonably permit to expect a continuation of the employment relationshipbetween the parties, a contract may be terminated prematurely. Hence, if there aremore lenient measures which can be taken in order for an employer to ensure theemployee’s fulfilment of his contractual duties, such measures must be taken beforeterminating an employment contract. A premature termination of an employmentcontract can only ever be an ultima ratio measure.
17. In this respect, the Single Judge observed that the aforementioned clause stipulated that “The Club has the right to unilateral termination of the Agreement, in which case the Coach has no right to any kind of reimbursement.”
18. After examining the contents of the aforementioned clause, the Single Judge wished to highlight that that aforementioned clause appears to grant an excessive capacity to unilaterally terminate the contract without further explanation. Hence, the Single Judge considered that the referred clause is of a potestative nature.
19. In this regard, and, in accordance with the longstanding jurisprudence of the Players’ Status Committee, the Single Judge recalled that potestative clauses, i.e. clauses that contain obligations which fulfilment are conditional upon an event that one party entirely controls, cannot be considered since they limit the rights of the other contractual party in an excessive manner and lead to an unjustified disadvantage of the latter towards the other. In this case, the Respondent was the only party which could decide to terminate the contract.
20. Thus, the Single Judge understood that clause 9 of the contract shall be deemed as null and void.
21. In view of all the previous considerations, the Single Judge established that the Respondent terminated the contract without just cause on 26 March 2020 and, as a result, the Claimant is entitled to compensation.
22. In continuation, the Single Judge focused its attention on the calculation of the amount of compensation for breach of contract in the case at stake. In doing so, the Single Judge firstly recapitulated that, in accordance with the jurisprudence of the Players’ Status Committee, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including, in particular, the remuneration and other benefits due to the Claimant under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years.
23. In application of the relevant provision, the Single Judge held that it first of all had to clarify as to whether the pertinent employment contract contains a provision by means of which the parties had beforehand agreed upon an amount of compensation payable by the contractual parties in the event of breach of contract. In this regard, the Single Judge observed that the contract had no valid clause in this regard.
24. Bearing in mind the foregoing, the Single Judge considered that the amount of payable compensation shall be calculated in accordance with the jurisprudence of the Players’ Status Committee.
25. In view of the above, the Single Judge proceeded with the calculation of the monies payable to the coach under the terms of the employment contract until its original date of expiration.
26. In particular, the Single Judge noted that, from the date of termination, the contract was about to run until 31 May 2021 (i.e. 14 months), and that during said period, the coach would still be entitled to earn the total amount of EUR 278,880 i.e. EUR 19,920*14. The Single Judge concluded that this amount shall serve as the basis for the final determination of the amount of compensation for breach of contract.
27. In continuation, the Single Judge verified as to whether the Claimant had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled to reduce his loss of income. According to the constant practice of the Players’ Status Committee, such remuneration under a new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract in connection with the Claimant’s general obligation to mitigate his damages.
28. In this respect, the Single Judge noted, subsequently, that on 5 September 2020 he concluded an employment contract with the club, NK Osijek, valid as from the date of signature until 30 June 2023. The Single Judge verified that, accordingly, the coach was entitled to a monthly salary of EUR 10,000. The Single Judge therefore understood that, from September to 31 May 2021, the Claimant would have earned 90,000,. i.e. 10,000*9.
29. As a result of the difference between the aforementioned amounts, the Single Judge determined that the payable compensation amounts to EUR 188,880 (i.e. 278,880 – 90,000).
30. In conclusion, for all the above reasons, the Single Judge decided to partially accept the Claimant’s request and held that the Respondent must pay to the Claimant the amount of EUR 188,880 as compensation for breach of contract without just cause.
31. Besides, the Single Judge noted that the Claimant further requested to be reimburse with the applicable VAT. However, after duly examining the contract, the Single Judge observed that it did not stipulate that the club shall reimburse the VAT it to the claimant, but merely stated that it is not included. Hence, the Single Judge rejected this part of the claim.
32. In addition, and taking into account the longstanding jurisprudence in this respect as well as the Claimant’s request, the Single Judge decided to award 5% interest p.a. over the applicable compensation amount as from the date of claim.
33. In continuation, the Single Judge of the PSC referred to art. 25 par. 2 of the Regulations in combination with art. 18 par. 1 of the Procedural Rules, according to which in irs proceedings the maximum amount of CHF 25,000 are levied. The costs are to be borne in consideration of the parties’ degree of success in the proceedings.
34. In this respect, the Single Judge of the PSC referred to the Covid-19 Football Regulatory Issues – FAQ, published on 11 June 2020 which establish that, given the current circumstances, for any claim lodged prior to 10 June 2020 which has yet to be decided, the maximum amount of the procedural costs shall be equivalent to any advance of costs paid. Thus, considering that the amount of CHF 5,000 was paid at the beginning of the proceedings, the Single Judge decide to imposed the payment of CHF 5,000 by the Respondent.
III. Decision of the Single Judge of the PSC
1. The claim of the Claimant, René Poms, is admissible.
2. The claim of the Claimant is partially accepted.
3. The Respondent, GNK DInamo Zagreb, has to pay to the Claimant, the amount of EUR 188,880 as compensation for breach of contract without just cause plus 5% interest p.a. as from 29 May 2020 until the date of effective payment.
4. Any further claims of the Claimant are rejected.
5. The Claimant is directed to immediately and directly inform the Respondent of the relevant bank account to which the Respondent must pay the due amount.
6. The Respondent shall provide evidence of payment of the due amount in accordance with this decision to email@example.com, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).
7. In the event that the amount due, plus interest as established above is not paid by the Respondent within 30 days, as from the notification by the Claimant of the relevant bank details to the Respondent, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee.
8. The final costs of the proceedings in the amount of CHF 5,000 are to be paid by the Respondent to FIFA (cf. note relating to the payment of the procedural costs below).
For the Single Judge of the PSC:
Emilio García Silvero
Chief Legal & Compliance Officer
NOTE RELATED TO THE APPEAL PROCEDURE:
According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS) within 21 days of receipt of the notification of this decision.
NOTE RELATED TO THE PUBLICATION:
FIFA may publish this decision. For reasons of confidentiality, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Procedural Rules).
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