F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2020-2021) – fifa.com – atto non ufficiale – Decision 18 February 2021
Decision of the
Dispute Resolution Chamber
passed on 18 February 2021,
regarding an employment-related dispute concerning the player A
COMPOSITION:
Omar Ongaro (Italy), Deputy Chairman
Elvis Chetty (Seychelles), member
Stijn Boeykens (Belgium), member
CLAIMANT:
A, Country A
Represented by
RESPONDENT:
B, Country B
Represented by
I. FACTS OF THE CASE
1. On 19 January 2018, the Parties signed an employment contract (hereinafter: “the first employment contract”) valid from 1 February 2018 until 31 May 2022.
2. The Parties agreed to a basic salary according to annex 1 (remuneration agreement) of the contract which provides for “a basic monthly reward upon both-sides agreement of EUR 17.000 net with effect from 01.02.2018 until 31.05.2022”.
3. On 9 August 2018, the parties signed a new employment contract (hereinafter: “the second contract”) valid from 9 August 2018 until 30 May 2023.
4. Clause 2 of annex 1 to the second contract states that the “basic monthly salary is EUR 26.600 gross with effect from 09 August 2018 to 31 May 2023”.
5. In addition to the second contract, the parties signed two more documents:
- the agreement on the Provision of a Motor Vehicle for Business and personal use of the Player and;
- a payroll deduction agreement.
6. According to art.III par.k of the agreement on the Provision of a Motor Vehicle for Business and Personal use “(…) the Player hereby agrees to pay the Club the sum of EUR 3.168,19 for the use of the Motor Vehicle for personal purposes (…)”.
7. According to art. 1 par. 3 of the payroll deduction agreement: “The Club and the Player have agreed that based on this Agreement the Club will make regular monthly deductions from the Player's remuneration (hereinafter referred to as the "salary'') in favour of the Club.”
8. According to art.1 par. 4 of the payroll deduction agreement:
“(…) This Payroll Deduction Agreement is concluded for the purpose of ensuring the coverage of costs incurred by the Club in relation to the violation of or in connection with the Player's obligations when using the motor vehicle (…)”
9. Article art. II para.1 of the payroll deduction agreement states that:
“(…) The Player hereby grants his explicit agreement with the Club on this Payroll Deduction Agreement, in particular, in the event of any damage to or on the Motor Vehicle when used for personal purposes. The Player undertakes to compensate the Club for such damage through salary deductions provided based on this Agreement which shall not exceed the sum of the deductions pursuant to Act No. xxx on Civil Procedure as amended.”
10. On 30 June 2020, the parties signed another employment contract (hereinafter: “the third contract”) starting from 1 July 2020 to 31 May 2025.
11. Clause 2 of annex 1 to the third contract states the following:
The club and the player hereby agree with the following remuneration conditions; basic monthly salary of EUR 31,800 gross with effect from 01 July 2020 to 31 May 2025”.
12. The third contract further provides under clause XI. 9 (final provisions) the following:
“The parties have agreed on termination of the contract of sport registered by the Country B Football Association under No xxx with force by 30.06.2020”.
13. Lastly clause X.6 (b) of the third contract states that “the Player is entitled to unilaterally withdraw from this agreement exclusively if the Club repeatedly violates material provisions of this contract and the Player notified the club on this within 30 days from finding out the repeated material violation of a contractual obligation (…)”.
14. On 15 May 2020, the club sent a letter to all players stating that due to Covid-19, it would be freezing and/or cutting players’ wages.
15. On 19 May 2020, the player responded and rejected the club’s proposal and stated that if the club fails to comply with the obligation to pay his wages, he will terminate his employment relationship with the club. The player apparently received no response from the club in this regard.
16. On 30 June 2020, the parties concluded the third contract.
17. On 2 September 2020, the player lodged a claim against the club before FIFA requesting the following:
-That FIFA intervenes so he can terminate his contract with the club;
-That the club has to pay to him, the amount of EUR 65,540.86 as outstanding remuneration.
18. In support of his claim, the player stated that in an email dated, 15 May 2020, the club proposed to ‘cut and froze his earnings’ starting from March 2020 as follows:
- March ‘30% cut and 30 % freeze - paid until 15.5.2020’;
- April ‘30% cut and 30% freeze - paid until 29.5.2020’;
- May ‘25% cut and 35% freeze - paid until 26.6.2020’:
- June ‘20% cut and 40% freeze - paid until 27.7.2020’.
19. The player argued that the club sent the proposal to decrease and ‘freeze his wages’ only after it had already cut wages and paid it out and that the club did not notify him beforehand nor agree with him that they would do so.
20. In addition, according to the player, the club owes him almost 3 months’ worth of wages amounting to EUR 65,540.86. The player deemed that according to the third contract, the club is obliged to pay a basic monthly salary of EUR 24,000 but that the club had only paid the following amounts:
- EUR 5,500.00 in the month of March 2020;
- EUR 18,956.93 in the month of April 2020;
- EUR 11,555.26 in the month of May 2020;
- EUR 0 in the month of June 2020;
- EUR 21,579.32 in the month of July 2020;
- EUR 20,867.63 in the month of August 2020;
- EUR 0 in the month of September 2020.
In view of the above, the player stated that the total amount paid by the club equals to EUR 78,459.14, however, the income for 6 months starting from March 2020 should be EUR 144,000 and that therefore the outstanding amount owed is EUR 65,540.86 (“almost 3 months’ worth of salary”).
21. The player alleged that despite the cut wages, he still went to every training session and fulfilled his professional duties at all times.
22. The player concluded by saying that the ‘unlawful freeze and especially the permanent cut’ in his wages was not mutually agreed and that there was no postponement of payment agreed either and as a result, the club should pay the outstanding amounts as indicated above.
23. In its reply, the Club rejected the claim of the Player and filed a counterclaim against him as follows:
-That FIFA rejects the claim of the player;
-Alternatively, if the player insists on the termination of the third contract, such termination is without just cause and the player must pay the club compensation of EUR 1,740,261 plus interest of 5% p.a. as of the termination date until the date of effective payment,
-And that the player should be imposed a playing ban under article 24bis RSTP
24. The club in its response stated that on 09 August 2018, it proposed improved financial conditions to the player, and the parties entered into a new, second contract, valid through 31 May 2023, which novated and superseded the first contract. The club added that according to the annex 1 of the second contract, the player was entitled, inter alia, to a monthly salary of EUR 29,200 gross (corresponding to EUR 22,000 net) in the 2019/2020 season.
25. The club further submitted that in connection with the second contract, the parties also signed two more agreements, whereby the club undertook the obligation to provide the player “with a passenger motor vehicle, of which it is the Holder” (i.e., a luxury Mercedes-AMG) for “personal purposes” and the player accepted that “the Club will make the corresponding regular monthly deductions from the Player’s remuneration” of EUR 3,168.19 “for the use of the Motor Vehicle” (the “Car Agreement”).
26. The club further stated that on 15 May 2020, it proposed to all players to accept a retroactive “cut plus freeze” of 60% of their salaries due to a force majeure, i.e., the COVID-19 pandemic impact on the club’s financial situation. However, on 19 May 2020, i.e., before the April 2020 salary fell due on 20 May 2020, the player rejected the offer, stating that he would not tolerate any salary reductions, and reserved the right to terminate the second contract (for non-payment in full of only one salary, i.e. March 2020).
27. Nonetheless, the club submitted that despite the player’s protest and warning to terminate the second contract for non-payment of less than one salary, the player remained in the club and did not send any further notice.
28. Thereafter, according to the club, the parties agreed to sign the third contract, with improved financial terms for the player, valid from 1 July 2020 through 31 May 2025, in order to novate and supersede the second contract. The club stated that the third contract allegedly came into force on 1 July 2020 and terminated the second contract, as explicitly provided in the third contract’s final clause.
29. The club argued that according to the annex 1 of the third contract, the player is entitled to EUR 31,800 gross (corresponding to EUR 24,000 net) per month in the 2020/2021 season.
30. The club further alleged that as of the outset of the year 2020, it paid the player the following amounts for wages from January to June 2020 in accordance with the second contract (due on the 20th day of the next month):
Month
Net amount paid
Due Date
Wage deduction for the car
Paid in EUR
Date of payment
Jan 2020
22,000
20.02.2020
3,168.19
18,917.63
27.02.2020
Feb 2020
22,000
20.03.2020
3,168.19
18,917.63
17.04.2020
March 2020
22,000
20.04.2020
3,168.19
5,777.63
14.05.2020
April 2020
22,000
20.05.2020
3,168.19
5,777.63
20.05.2020
May 2020
22,000
20.06.2020
3,168.19
7,967.63
17.07.2020
June 2020
22,000
20.07.2020
3,168.19
13,442.63
29.07.2020
31. The club further stated on 28 August 2020, it paid the player the July 2020 salary (which matured on 20 August 2020), deducting the relevant amount for the car. However, as the player refused to sign a new agreement on deductions for the car (and filed the present claim to FIFA), the club had to pay the balance corresponding to the July 2020´s salary and ask the player to return the car.
32. As a result, the club argued having paid the player the following amounts for the July 2020 wages in accordance with the third contract (due on the 20th of the next month):
Month
Gross amount in EUR
Net amount paid
Due Date
Wage deduction for the car
Paid in EUR
Date of payment
July 2020
31,800
24,000
20.08.2020
3,168.19
20,867.63
28.08.2020
31,168.19
05.10.2020
33. The club further stated that on 3 September 2020, without any prior notice, the player filed a claim in front of FIFA but that he did not terminate the third contract and did not leave the club.
34. Consequently, the club considered that the player did not terminate the third contract yet, which is binding and ongoing, and that he has no just cause for doing so, therefore, the prerequisites for the unilateral termination of the third contract on the grounds of a just cause outlined in articles 14 or 14bis RSTP are not met.
35. The club went on to examine whether it owes the player wages under the second contract and stated that in June 2020, the parties decided to settle the object of the initial claim, i.e., the debt based on the second contract thus, they mutually agreed to replace it with a new obligation which undoubtedly intended to novate the original obligation by signing the third contract.
36. According to the club, in casu, the parties’ intention to novate the old obligation is confirmed by Clause XI.9 of the third contact, which confirmed the termination of the second contract without any reservation whatsoever by the player; the increased salary of the player (from EUR 22,000 net to EUR 24,000 net), which was meant to cover the player’s losses under the second contract; and the extension of the term of the employment relationship (from 31 May 2023 to 31 May 2025). As such, and since the older debt is thereby replaced by a newer one, the player’s claim for outstanding wages under the second contract from March to June 2020 lacks a legal basis and, in any case, is unproven and unfounded.
37. The club further argued that given that the player signed the third contract with the club after the notice to the club on 19 May 2020, when only the March 2020 salary was due anyway, he cannot terminate the third contract with a just cause in October 2020 by reference to that notice as this is not in accordance with art. 14bis RSTP. Consequently, the club stated that the player’s claim should be rejected without further considerations.
38. The club concluded by stating that if the player decides to proceed with the termination of the third contract, he will be liable to pay compensation for damages to the club, calculated based on Article 17.1 RSTP, as follows:
- EUR 1,621,800 (i.e., 51 months x EUR 31,800) for the residual value of the third contract until 31 May 2025;
- EUR 138,461 for the non-amortized portion of the fees paid for the transfer of the player from Club C.
39. In its replica, the player stressed that he understands that COVID-19 might have an impact on the club’s financial situation, however it does not change the fact that player is an employee and needs to receive his wages accordingly, and it does not relieve the club from not paying salary that the player signed for.
40. In regards to the club’s argument that “the Parties agreed to sign the third contract, with improved financial terms in order to novate and supersede the second contract.”, the player confirmed that he did indeed sign the third contract with the club but that however it does not mean that the club is not liable for repaying any owed monies under previous contracts. The player remarked that he did not waive his rights for any outstanding salaries from the second contract and that the third contract was a prolongation of the second contract with an increased salary, which is a standard practice in football clubs, taking into account that the player has been with the club since 2018 and is one of the top players.
41. In regards to the club’s response that despite his protest and warning to terminate the second contract for non-payment of less than one salary, he remained in the club and did not send any further notice, the player emphasized that he did not receive any response to his notice. The player also added that this comment seems irrelevant to this matter since he is expected to stay professional at all times despite any arising matters with the club until it’s resolved, and it’s in the Player’s best interest to keep up with his statistics, physique and not breaching any contractual terms.
42. In response to the club’s allegation that it paid the player’s July 2020 salary after deducting the car costs since the player refused to sign the new agreement on deductions for the car, the player stated that he was never offered a new agreement on deductions for the car with the third contract and therefore has never refused to sign one.
43. In response to the club’s statement that “if the Player decides to proceed with the termination of the Third Contract, he will be liable to pay compensation for damages to the Club”, the player submitted that the fees and conditions proposed by the club are nowhere reasonable and justified and proceeded to provide a “factual background on the debts” as follows;
44.
Month
Due date
Date paid
Amount due
Amount paid
overdue
March
20.04.2020
14.05.2020
18,917.63
5,777.63
13,140
April
20.05.2020
20.05.2020
18,917.63
5,777.63
13,140
May
20.06.2020
17.07.2020
18,917.63
7,967.63
10,950
June
20.07.2020
29.07.2020
18,917.64
13,442.63
5,475
July
20.08.2020
28.08.2020
20,867.63
0
Total Outstanding
42,705
45. In view of the above, the player submitted that the club still owes him EUR 42,705 as outstanding remuneration.
46. In addition to the above, the player stated that his reduced play time during matches by the club without any legitimate reason and despite his great physique resulted in a drop of his statistics. The player further alleged that ever since he complained about money reduction, he stopped getting the same number of minutes which affected his overall statistics which has taken a huge toll on a player’s emotional and mental health as a result of lost potential opportunities.
47. The player has submitted that another reason why he would want to terminate his employment with the club is not only because of the material violations done by the club but also because of all the pressure and stress received as the result of club's unprofessional reaction to FIFA's claim. In this respect, the player argued that “on 11th September around 6 am, the Club's president came with his personal security guards to Player’s house, without any prior notice, knocking loudly on the doors, waking up his whole family. He was putting a fear and pressure on the Player to drop the case with FIFA”. The player was scared for his and his family's safety and had to send away his wife and daughter to Country A. Also, on 5th of October 2020, the club’s President allegedly persistently tried to call the player 3 times in the row after which “the Club’s President randomly sent a photo of the Player’s sister which made him scared for his sister’s safety”.
48. The above, in the player’s opinion, clearly constitutes harassing and abusive behaviour towards him and it is against the FIFA Regulations, therefore no player would feel comfortable to carry on his career under these conditions.
49. Finally, the player added that ever since he filed a case against the club at FIFA, the club’s President has been harassing him to sign a settlement agreement forcing him to withdraw his claim against the club.
II. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER
1. First of all, the Dispute Resolution Chamber (hereinafter referred to as “the DRC”) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the player’s claim was lodged on 2 September 2020. Taking into account the wording of art. 21 of the June 2020 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the aforementioned edition of the Procedural Rules is applicable to the matter at hand.
2. Subsequently, the DRC referred to art. 3 par. 2 and par. 3 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 and par. 2 in conjunction with art.22 lit. b of the Regulations on the Status and Transfer of Players (edition August 2020), it is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Country A player and a Country B club.
3. Furthermore, the DRC analyzed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that in accordance with art. 26 par. 1 and par. 2 of the Regulations on the Status and Transfer of Players (edition August 2020), and considering that the present claim was lodged on 2 September 2020, the August 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.
4. The competence of the DRC and the applicable regulations having been established, the DRC entered into the substance of the matter. Subsequently, the DRC continued by acknowledging the above-mentioned facts as well as the documentation contained in the file in relation to the substance of the matter. However, the DRC emphasized that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.
5. Entering into the substance of the matter at hand, the DRC first of all acknowledged that the parties to the dispute had concluded the following three contracts:
-the “first employment contract”, valid as from 1 February 2018 until 31 May 2022, pursuant to which the club undertook to pay the player a monthly salary of EUR 17,000;
-the “second contract”, valid as from 9 August 2018 until 30 May 2023, pursuant to which the club undertook to pay the player a monthly salary of EUR 26,600;
-the “third contract”, valid as from 1 July 2020 to 31 May 2025, pursuant to which the club undertook to pay the player a monthly salary of EUR 31,800.
6. Moreover, the DRC took note of the fact that on 15 May 2020, the club sent a letter to all its players, proposing to ‘cut and freeze’ their salaries with a retroactive effect as of March 2020 due to the COVID-19 pandemic and that the player rejected this proposal in his letter of 19 May 2020.
7. Having recalled the above, the DRC observed that, the player, in his claim lodged on 2 September 2020, claimed outstanding remuneration in the amount of EUR 64,540.86 and requested FIFA’s intervention in terminating his contract with the club.
8. In continuation, the DRC took note that the club, for its part, rejected the player’s claim and filed a counterclaim against the player, requesting the payment of compensation in the amount of EUR 1,740,261 for breach of contract, should he insist on terminating the “third contract”.
9. Furthermore, the DRC took into account the fact that in response to the club’s submission, the Player amended his request for outstanding remuneration to EUR 42,705.
10. At this point, the DRC deemed it relevant to first analyse the player’s request for FIFA’s intervention in declaring his contract with the club terminated. In this respect, the DRC recalled that on the basis of art. 14 of the Regulations, either party to an employment contract between a professional player and a club, may terminate such contract, without consequences of any kind, when there is just cause. As per the longstanding jurisprudence of the DRC and the PSC, the decision whether or not there is a just cause and whether the contract should be effectively terminated, is left at the full discretion of the party, intending to terminate the contract.
11. What is more, in case of a dispute following a possible termination of the contract by one of the parties, it would be up to the competent decision-making body to establish whether a contractual breach occurred, with or without just cause, who is to be deemed responsible and what the consequences of such a breach would be (cf. article 17 of the Regulations).
12. As a result, the DRC decided that it could not – in its role as decision-making body - decide to effectively terminate the contract, as said decision should be made by either the club or the player. .
13. In view of the above, the DRC decided that in the matter at hand, no (unilateral) termination of the contract could be established, since none of the parties effectively terminated the contract. Therefore, the DRC established that in the matter at hand, it could only consider the player’s request for outstanding remuneration.
14. In continuation, and analysing whether there were any amounts that remained outstanding, the DRC first of all turned to the club’s argument that the parties signed a new and third contract, with the intention to ‘delete’ the initial debt. In this regard, the DRC wished to draw the attention to the fact that the wording of the third contract, especially clause XI.9 as quoted above, does not contain any reference to the waiving of outstanding amounts or the novation of previous debts of the club towards the player.
15. In conclusion, the DRC established that by signing the third contract, the previous debts were not ‘deleted’, the outstanding amounts were not waived by the player and therefore remained payable.
16. Additionally, the DRC wished to point out that the waiving of salaries for work already performed, might be conflicting with the wording of art. e 341 para. 1 of the Swiss Code of Obligations.
17. What is more, the DRC consequently focused its attention on the argumentation submitted by the Respondent, that in view of the COVID-19 pandemic, on 15 May 2020, it sent a letter to all its players, proposing to reduce salaries by 60% with a retroactive effect as of March 2019. Said proposal was consequently rejected by the player, however, the club still proceeded with such variation to the contract.
18. In continuation, and entering into the analysis whether such variation was validly made in view of the FIFA COVID-19 Guidelines, the DRC noted that despite the Player’s rejection of its proposal, the club proceeded to unilaterally vary the terms of the contract by reducing the salary. It appeared to the DRC that as such, no negotiation in good faith were made by the club, and furthermore, the club could also not prove with documentary evidence that the unilateral variation to the contract was made in line with national Country B law. The DRC therefore concluded that in view of the documents submitted, the Club had no valid reason for this unilateral variation of the contract.
19. Consequently and considering the documentation on file, the DRC decided that the Club should pay the outstanding remuneration under the Second contract in the amount of EUR 42,705 as follows:
- EUR 13,140 as outstanding remuneration for the month of March 2020;
- EUR 13,140 as outstanding remuneration for the month of April 2020;
- EUR 10,950 as outstanding remuneration for the month of May 2020;
- EUR 5,475 as outstanding remuneration for the month of June 2020.
20. The DRC concluded its deliberations in the present matter by establishing that the claim of the player is accepted.
21. Furthermore, taking into account the consideration under number II./3. above, the DRC referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.
22. In this regard, the DRC pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.
23. Therefore, bearing in mind the above, the DRC decided that, in the event that the club does not pay the amounts due to the player within 45 days as from the moment in which the player, following the notification of the present decision, communicates the relevant bank details to the club, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the club in accordance with art. 24bis par. 2 and 4 of the Regulations.
24. Finally, the DRC recalled that the above-mentioned ban will be lifted immediately and prior to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3 of the Regulations.
III. DECISION OF THE DISPUTE RESOLUTION CHAMBER (DRC) JUDGE
1. The claim of the Player, A, is accepted.
2. The Club, B, has to pay the Player the total amount of EUR 42,705 as follows:
- EUR 13,140 as outstanding remuneration for March 2020;
- EUR 13,140 as outstanding remuneration for April 2020;
- EUR 10,950 as outstanding remuneration for May 2020;
- EUR 5,475 as outstanding remuneration for June 2020.
3. The Player is directed to immediately and directly inform the Club of the relevant bank account to which the Club must pay the due amount.
4. The Club shall provide evidence of payment of the due amount in accordance with this decision to psdfifa@fifa.org, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).
5. In the event that the amount due, plus interest as established above is not paid by the Club within 45 days, as from the notification by the Player of the relevant bank details to the Club, the following consequences shall arise:
1.
The Club shall be banned from registering any new players, either nationally or internationally, up until the due amount is paid and for the maximum duration of three entire and consecutive registration periods. The aforementioned ban mentioned will be lifted immediately and prior to its complete serving, once the due amount is paid.
(cf. art. 24bis of the Regulations on the Status and Transfer of Players).
2.
In the event that the payable amount as per in this decision is still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee.
For the Dispute Resolution Chamber:
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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