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 20 January 2021

Decision of the

Dispute Resolution Chamber

Passed on 20 January 2021,

regarding an employment-related dispute concerning the player Alexey Schumskikh

COMPOSITION:

Omar Ongaro (Italy), Deputy Chairman Tomislav Kasalo (Croatia), member José Luis Andrade (Portugal), member

CLAIMANT:

ALEXEY SCHUMSKIKH, Russia

Represented by Mr. Arthur Egiyan

RESPONDENT:

FC KAYSAR, Kazakhstan

I.

I. FACTS OF THE CASEFACTS OF THE CASE

1. On 31 December 2019, the Russian player Alexey Schumskikh (hereinafter: the player or the Claimant) and the Kazakh club, FC Kaysar (hereinafter: the club or the Respondent) concluded an employment contract valid as from 5 January 2020 until 13 November 2020 (hereinafter: the contract).

2. According to the contract, the Respondent undertook to pay the Claimant a monthly salary of Kazakhstan Tenge (KZT) 6,000,000, payable “no later than the 10th day of the following month”.

3. According to clause 2.1.18 of the contract (quoted verbatim): “The employee has the right to apply for resolution of an individual labor dispute to the legal authorities in the following order: (Dispute Resolution Chamber and Appeal Committee) Association of Legal Entities «Association «Kazakhstan Football Federation» (hereinafter referred to as the «KFF»), court of his choice”.

4. According to clause 2.5.1 of the contract (quoted verbatim): “to amend, to supplement, to dissolve and to terminate the present employment contract in the procedure and on the grounds established by the Code”.

5. According to clause 4.2 and 4.2.4 of the contract (quoted verbatim):

“4.2. If the Employee commits a disciplinary misconduct, the Employer has the right to impose the following types of disciplinary sanctions:

4.2.1. a rebuke;

4.2.2. a reprimand;

4.2.3. a severe reprimand;

4.2.4. termination of the Employment Contract at the initiative of the Employer on the grounds provided for by the Code.

The imposition of disciplinary sanctions not envisaged in this employment contract is not permitted”.

6. According to clause 7.1.3 of the contract (quoted verbatim): “The grounds for termination of the employment contract are: 7.1.3 termination at the initiative of the Employer on the grounds and in the procedure prescribed by the Labor Code of the Republic of Kazakhstan, if the employment contract is terminated at the initiative of the Employer, the Employee is paid the compensation for the unused leave in accordance with the Labor Code of the Republic of Kazakhstan”.

7. According to clause 11.2 of the contract (quoted verbatim): “This employment contract (as well as a collective contract, if it is concluded) is the only agreement governing labor relations between the Parties”

8. According to clause 12.3 of the contract (quoted verbatim): “All relations between the Parties that are not settled by the present employment contract are regulated by the Code, the governing documents of the FFK, the PFLK, FIFA and UEFA”.

9. On 27 May 2020, the Respondent terminated the contract due to the fact that the player refused to “continue employment relations), in connection with the employee's refusal to continue employment relations because of alterations in the employment conditions”. In said correspondence, the Respondent referred to Kazakh labour law. The player signed the notice of termination served by the club but stated both that he did not agree with the termination and that such termination was made at the initiative of the club.

10. On 24 August 2020, the Claimant sent a notice to the Respondent, arguing that he had not been notified by the club about any alterations in the contract, and that he did not refuse to continue to work. Accordingly, the player requested inter alia the following:

“1.1. The debt on monthly salary for May 2020 in the amount of 6 000 000 (six million five hundred thousand) tenge net.

1.2. The debt on leave allowance (compensation for unused leave) in the amount of 5 600 000 five million six hundred thousand) tenge net.

1.3. The debt on compensation for early termination of the Employment Contract in the amount of 36 000 000 (thirty-six million) tenge net.

1.4. The debt on additional compensation in connection with the early termination of the Employment Contract, provided for by Art. 337c of the Swiss Code of Obligations, in the amount of 36 000 000 (thirty-six million) tenge net.

1.5. The penalty fee established by Article 113 of the Labor Code of the Republic of Kazakhstan for violation of the terms of payment of monthly salary, leave allowance (compensation for unused leave), compensation for early termination of the Employment Contract, additional compensation in connection with termination of the Employment Contract, calculated from the moment when payments should have been made to the date of actual repayment of debt by the Employer inclusive.

1.6. Monetary funds on account of repayment of other debts owed to the Employee”.

11. On 7 September 2020, the club replied to said notice and inter alia referred to the COVID 19 pandemic and Kazakh Law, stating that the club had decided “to alter the employment conditions”, having notified its employees that “all the salaries would be decreased from 1 May 2020”. The club stated in such letter that a copy of the notification was attached. The club further argued that the player must observe the local Law and that as such the employment contract was terminated in accordance with the Labour Code of Kazakhstan. Additionally, the club argued that such termination was made with just cause under art. 14 (1) of the FIFA Regulations on the Status and Transfer of Players (RSTP).

12. According to the Transfer Matching System (TMS), on 15 June 2020 the player and the Russian club, FC Nizhny Novgorod, signed an employment agreement valid as from the same date until 5 July 2021, pursuant to which the player is entitled to a salary of Russian Rubles (RUB) 240,000 per month plus RUB 105,000 as monthly guaranteed bonuses.

II.

II. PROCEEDINGS BEFORE FIFA

13. On 23 October 2020, the Claimant filed the claim at hand before FIFA. A brief summary of the position of the parties is detailed in continuation.

a.

a. The claim of the ClaimantThe claim of the Claimant

14. The player argued that FIFA is competent to hear the claim on account of the fact that the Kazakh National dispute Resolution Chamber is not functioning, nor respects FIFA Circular 1010.

15. In his claim, the player maintained that the Respondent had no just cause to terminate the contract either under the RSTP or Kazakh Law.

16. As a consequence, the Claimant requested payment of his salary of May 2020 and compensation for breach of contract, broken downs as follows:

a) The monthly salary for May 2020 in the amount of KZT 6,000,000 net;

b) The compensation for the unused leave (payment for leave) in the amount of KZT 5,600,000 net, referring in this respect to the local law;

c) The compensation for the damages caused by the early termination of the contract without just cause in the amount of KZT 36,774,193.55 net.

d) The additional compensation for the early termination of the contract without just cause with immediate effect in accordance with paragraph 3 of Article 337c of the Swiss Code of Obligations in the amount of KZT 36,000,000 net.

e) Interest in the amount of 11.88% per annum for violation of the terms of payment of the monetary amounts due to Mr. Alexey Shumskikh for the period from 30 May 2020 to the date of actual repayment of the debts.

17. With regards to the interest, the player explained that ”The Respondent must pay interest in the amount of the refinancing rate established by the National Bank of the Republic of Kazakhstan, multiplied by 1.25 for violation of the terms of payment of the monetary amounts due to the Claimant”. Moreover, he stated that “As of the date of the Claimant’s dismissal (27 May 2020), the refinancing rate of 9.5% per annum was in effect in the Republic of Kazakhstan, which is confirmed by the information taken from the official website of the National Bank of the Republic of Kazakhstan”. Consequently the player arrived at the amount of 11.88% (1.25 x 9.5%).

18. The player nonetheless argued as follows: “If the FIFA DRC considers that the legislation of the Republic of Kazakhstan is inapplicable, the interest will be collected at the rate of 5% per annum in accordance with the jurisprudence of the FIFA DRC. However, the Claimant respectfully asks the FIFA DRC to take into account that the Claimant's salary is established not in the US dollars or Euros, but in tenge, which is a less stable currency. According to the information from the official website of the National Bank of the Republic of Kazakhstan, the rate of inflation for the tenge is 7% per annum (Attachment № 10). If the interest is collected from the Respondent less than the rate of inflation, then it will be more profitable for the Respondent not to pay the debts to the Claimant, and the Claimant will not be compensated for the damages from the violation of the terms of payment of the debts owed to him”.

b.

b. Position of the RespondentPosition of the Respondent

19. The club explained that the local government declared a “state of emergency” due to the COVID pandemic. The club also explained that the pandemic cause all competitions to be suspended.

20. The club furthermore argued that since the player is bound by Kazakh Law and refused to accept a change in the working conditions, the club terminated the contract. The club deems to be entitled to do so under the Labour Code of Kazakhstan, and deems that such entitlement is just cause under art. 14 (1) of the RSTP for the termination of the contract.

21. Lastly, the club argued that due to the pandemic it sustained an income loss due to budget reduction by the club’s ownership, allegedly the City Administration of the Kyzylorda region.

22. The Respondent further argued that the all players and coaching staff “have shown understanding and signed an Additional Agreement to reduce wages”.

23. The club requested that the claim be rejected.

III.

III. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER

a.

a. Competence and applicable legal frameworkCompetence and applicable legal framework

24. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was presented to FIFA on 23 October 2020 and submitted for decision on 20 January 2021. Taking into account the wording of art. 21 of the January 2021 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.

25. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and observed that in accordance with art. 24 par. 1 in combination with art. 22 lit. a) and b) of the Regulations on the Status and Transfer of Players (edition January 2021), the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Russian player and a Kazakh club.

26. Subsequently, the Chamber analysed 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 2 of the Regulations on the Status and Transfer of Player (edition January 2021), and considering that the present claim was lodged on 23 October 2020, the October 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

b.

b. Burden of proofBurden of proof

27. The Chamber recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, the DRC stressed the wording of art. 12 par. 4 of the Procedural Rules, pursuant to which it may consider evidence not filed by the parties.

28. In this respect, the Chamber also recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA’s judicial bodies may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in TMS.

c.

c. Merits of the disputeMerits of the dispute

29. The competence of the DRC and the applicable regulations having been established, the DRC entered into the merits of the dispute. In this respect, the DRC started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file. However, the DRC emphasised 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.

i. Main legal discussion and considerations

30. The foregoing having been established, the Chamber moved to the substance of the matter, and took note of the fact that the parties strongly dispute whether the player had just cause.

31. In this context, the Chamber firstly wished to highlight that FIFA issued a set of guidelines, the COVID-19 Guidelines, which aim at providing appropriate guidance and recommendations to member associations and their stakeholders, to both mitigate the consequences of disruptions caused by COVID-19 and ensure that any response is harmonised in the common interest. Moreover, on 11 June 2020, FIFA has issued an additional document, referred to as FIFA COVID-19 FAQ, which provides clarifications on the most relevant questions in connection with the regulatory consequences of the COVID-19 outbreak and identifies solutions for new regulatory matters.

32. The DRC also wished to refer to the fact that said guidelines – as per the explicit wording of FAQ no. 16, as well as pages 6 and 7 of the FIFA COVID-19 Guidelines – are only applicable to “unilateral variations to existing employment agreements”. Therefore, except where a termination of a contract occurred following a unilateral variation made as a result of COVID-19 (in which case the validity of the variation must first be assessed under the guidelines), said guidelines do not apply to assess unilateral terminations of existing employment agreements. The Chamber further noted that for the assessment of disputes that are presented before the FIFA judicial bodies concerning the unilateral termination of a contract, the FIFA Regulations as well as the established jurisprudence of the Chamber shall apply.

33. Having stated the above, the DRC took note of the fact that it stood undisputed that the club at first tried to reduce the player’s salary, which was not accepted by the latter, and that the club then terminated the contract.

34. In light of the particular circumstances of the case and taking into special consideration the fact that the club presented the player with an amendment to the contract, the DRC came to the conclusion that it cannot be considered that a unilateral variation took place; otherwise the club would not have asked for the player’s consent. In fact, the DRC determined that the special constellation described above amounted to an attempt to reach an agreement, albeit a rather aggressive and forced one. The DRC found nonetheless that is clear that this attempt was not successful, since the player adamantly refused it.

35. Consequently, the DRC established that that was no unilateral termination of a contract following a unilateral variation of the contract, for which the Chamber confirmed that the FIFA COVID FAQ and the FIFA COVID Guidelines shall not apply, only the Regulations and the jurisprudence of the Chamber.

36. With the aforementioned considerations in mind, the Chamber wished to recall that when deciding a dispute before the DRC, FIFA’s regulations prevail over any national law chosen by the parties. In this regard, the Chamber emphasised that the main objective of the FIFA regulations is to create a standard set of rules to which all the actors within the football community are subject to and can rely on. This objective would not be achievable if the DRC would have to apply the national law of a specific party on every dispute brought to it. This should apply, in particular, also to the termination of a contract. In this respect, the DRC wished to point out that it is in the interest of football that the termination of a contract is based on uniform criteria rather than on provisions of national law that may vary considerable from country to country. Therefore, the Chamber deemed that it is not appropriate to apply in the case at hand the principles of a particular national law to the termination of the contract but rather the Regulations, general principles of law and, where existing, the Chamber’s well-established jurisprudence.

37. In this respect, the Chamber was eager to emphasise that only a breach or misconduct which is of a certain severity justifies the termination of a contract. In other words, only when there are objective criteria, which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. Hence, if there are more lenient measures which can be taken in order for an employer to ensure the employee’s fulfilment of his contractual duties, such measures must be taken before terminating an employment contract. A premature termination of an employment contract can only ever be an ultima ratio measure.

38. Accordingly, the issue that remains is only the unilateral termination of the contract by the club, which the Chamber firmly established to have taken place without just cause as per the longstanding jurisprudence of the DRC. To this end, the DRC noted firstly that the player did not refuse to continue his employment relation but rather rejected an offer of a sheer reduction in his remuneration and, secondly, that the position of the club cannot be upheld both from substance and evidence points of view since the Respondent has not provided any concrete evidence in support of its allegations.

ii. Consequences

39. Having stated the above, the Chamber turned its attention to the question of the consequences of such unjustified breach of contract committed by the club.

40. The Chamber observed that the outstanding remuneration at the time of termination, is equivalent to KZT 6,000,000 corresponding to the salary of May 2020. As a consequence, and in accordance with the general legal principle of pacta sunt servanda, the Chamber decided that the club is liable to pay to the player such amount.

41. In addition, taking into consideration the player’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the Chamber decided to award the player interest at the rate of 5% p.a. on the outstanding amounts as from the due date until the date of effective payment.

42. Having stated the above, the Chamber turned to the calculation of the amount of compensation payable to the player by the club in the case at stake. In doing so, the Chamber firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, 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 player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, and depending on whether the contractual breach falls within the protected period.

43. In application of the relevant provision, the Chamber held that it first of all had to clarify as to whether the pertinent employment contract contained 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 Chamber established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

44. As a consequence, the members of the Chamber determined that the amount of compensation payable by the club to the player had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The Chamber recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable.

45. Bearing in mind the foregoing as well as the claim of the player, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the contract until its term. Consequently, the Chamber concluded that the amount of KZT 32,600,000 (i.e. 5 months à KZT 6,000,000 each plus the pro-rata month of November 2020 amounting to KZT 2,600,000) serves as the basis for the determination of the amount of compensation for breach of contract.

46. In continuation, the Chamber verified as to whether the player 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 DRC as well as art. 17 par. 1 lit. ii) of the Regulations, 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 player’s general obligation to mitigate his damages.

47. Indeed, the player found new employment. In accordance with the pertinent employment contract, the player was entitled to RUB 240,000 per month plus RUB 105,000 as monthly guaranteed bonuses. Therefore, the Chamber concluded that the player mitigated his damages in the total amount of KZT 9,956,400 between the period of 15 June 2020 to 11 November 2020.

48. Subsequently, the Chamber referred to art. 17 par. 1 lit. ii) of the Regulations, according to which a player is entitled to an amount corresponding to three monthly salaries as additional compensation should the termination of the employment contract at stake be due to overdue payables. In the case at hand, the Chamber confirmed that the contract termination did not take place due to said reason i.e. overdue payables by the club, and therefore decided that the player is not entitled to additional compensation.

49. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the club must pay the amount of KZT 26,044,000 to the player (i.e. KZT 32,600,000 minus KZT 9,956,40), which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.

50. Taking into consideration the player’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, coupled with the absence of any contractual stipulation to the contrary, the Chamber decided to award the player interest on said compensation at the rate of 5% p.a. as of the date of claim until the date of effective payment.

51. Lastly, the DRC turned to the amount sought by the player as unused leave and decided, in line with the reasoning outlined above, to reject such claim due to a lack of a contractual basis in this respect.

iii. Compliance with monetary decisions

52. Finally, taking into account the applicable Regulations, the Chamber 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.

53. In this regard, the DRC highlighted 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.

54. 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 communicates the relevant bank details to the club, provided that the decision is final and binding, 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.

55. The DRC recalled that the above-mentioned bans 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.

56. Lastly, the DRC concluded its deliberations by rejecting any other requests for relief made by any of the parties.

d.

d. CostsCosts

57. The Chamber referred to article 18 par. 2 of the Procedural Rules, according to which “DRC proceedings relating to disputes between clubs and players in relation to the maintenance of contractual stability as well as international employment related disputes between a club and a player are free of charge”. Accordingly, the Chamber decided that no procedural costs were to be imposed on the parties.

58. Likewise and for the sake of completeness, the Chamber recalled the contents of art. 18 par. 4 of the Procedural Rules, and decided that no procedural compensation shall be awarded in these proceedings.

IV.

IV. DECISION OF THE DISPUTE RESOLUTION CHAMBER

1. The claim of the Claimant, ALEXEY SCHUMSKIKH, is partially accepted.

2. The Respondent, FC KAYSAR, has to pay to the Claimant the following amounts:

- KZT 6,000,000 as outstanding remuneration plus 5% interest p.a. as from 1 June 2020 until the date of effective payment;

- KZT 26,044,000 as compensation for breach of contract without just cause plus 5% interest p.a. as from 23 October 2020 until the date of effective payment.

3. Any further claims of the Claimant are rejected.

4. 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.

5. The Respondent 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).

6. In the event that the amount due, plus interest as established above is not paid by the Respondent within 45 days, as from the notification by the Claimant of the relevant bank details to the Respondent, the following consequences shall arise:

 1.

The Respondent 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.

7. The decision is rendered free of costs.

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).

CONTACT INFORMATION:

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