F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – coach disputes / controversie allenatori (2017-2018) – fifa.com – atto non ufficiale – Decision of the Single Judge of the Players’ Status Committee passed in Zurich, Switzerland, 23 January 2018

Decision of the Single Judge

of the

Players’ Status Committee

passed in Zurich, Switzerland, on 23 January 2018,

by

Mr Geoff Thompson (England),

Single Judge of the Players’ Status Committee,

on the claim presented by the coach

Coach A, Country B

as “Claimant”

against the club

Club C, Country D

as “Respondent”

regarding an employment-related contractual dispute

between the parties

I. Facts of the case

1. On 1 January 2017, the coach of Country B, Coach A (hereinafter: the coach or the Claimant), and the club of Country D, Club C (hereinafter: the club or the Respondent), signed an employment contract (hereinafter: the contract) valid as of the date of signature until 31 December 2017, for the position of assistant coach of the Respondent’s first team.

2. Pursuant to article 7.1 of the contract, the Respondent was to pay the Claimant a total salary of EUR 65,000 net. The monthly salary was to be paid on the 10th of the following month.

3. Art. 7.2 of the contract provides for bonuses due to the Claimant as follows:

 “Game bonus: In the league to win or draw matches with other teams, [the Claimant] will have the corresponding bonus set up before the game”;

 “Promotion bonus: if at the end of year 2017, [the Respondent] is successfully promoted to the League of Country D, [the Claimant] and his staff team will receive important promotion bonus”;

 “Game bonus is paid within 10 days after the game finishes”.

4. As per art. 8 of the contract, the Respondent shall provide the Claimant and his family with a total of two economy class round trip flight tickets between the Claimant’s hometown and Country D per season.

5. Article 10.3 and 10.4 of the contract respectively provides that “The contract may be cancelled by reaching agreement between [the parties] through negotiation” and “If the contract is terminated by [the Respondent] without a just cause, [the Respondent] shall pay [the Claimant] full amount of the remaining salary under this contract as compensation”.

6. Art. 12 of the contract states that “This contract shall not contain any contents against law of Country D. Any dispute will be resolved by consultation on a maximum terms of 15 days. If it cannot be resolved both sides has the right to send it to the Football Association of Country D or FIFA to adjudicate.”

7. On 19 March 2017, the Respondent informs the Claimant that, considering that “the team failed to achieve the desired results”, it decided that:

“1. [The Claimant] no longer serve as Assistant Coach of [the Respondent’s] team. Daily training and all the competitions will be organised by the coaching team of Country D.

2. The [Respondent] will initiate the contract cancellation procedures with [the Claimant] and will terminate the working contracts signed by both parties through friendly negotiation with [the Claimant] and [his] lawyer as soon as possible.

3. The [Respondent] will continue to pay the accommodation for [the Claimant] in Country D until March 31, 2017.”

8. On 21, 25 March and 2 April 2017, the Claimant underlines the termination without just cause from the Respondent and urges the Respondent to “sign the draft termination agreement already sent and pay, within a term of 15 days, the sum of EUR 54,166.66 net equal to the remaining amount of the contract due to the [Claimant]”. The Claimant further reminds the Respondent that all amounts of the contract are in euros and net of any taxes. The Claimant also requests a flight ticket in economy class to go back to his hometown.

9. On 12 April 2017, the Claimant informs the Respondent that he will refer the matter to FIFA for a formal decision in view of its “persistent failure to fulfil its contractual obligations”.

10. On 21 April 2017, the Claimant lodges a complaint against the Respondent before FIFA, claiming that the Respondent unilaterally terminated the contractual relationship with him on 19 March 2017 based on the lack of sporting performance of the Respondent’s first team under his services.

11. In this respect, the Claimant insists that the Respondent has never undertaken any disciplinary action against him or warned him about any dissatisfaction from its side. In any event, the Claimant emphasises that poor performance cannot constitute a just cause to terminate a contract.

12. Furthermore, the Claimant points out that, on 25 March 2017, the Respondent appointed a new Head Coach, Head Coach E. In this regard, the Claimant submits a press article in order to support his allegations.

13. Subsequently, the Claimant alludes to issues regarding payment of the Individual Income Tax” (IIT) by the Respondent. In particular, the Claimant insists that he accepted to sign the contract subject to his remuneration being net, paid in euro, and in view of the Respondent’s obligation to pay the taxes in Country D and provide evidence of such payment to the relevant tax authorities. The Claimant adds that the tax rate in Country D and Country B is equal regarding the relevant remuneration, namely 28.5%.

14. In this regard, the Claimant files the “Certificate of payment of taxes to the Country D” issued by the Tax Authority of Country D on 23 February 2017, regarding the payment, made by the Respondent on 17 February 2017, of the amount of 11,255.46 in the currency of Country D (approx. EUR 1,523.48) as taxes on the salary of January 2017.

15. Bearing in mind the above, the Claimant thus considers that the salary for January 2017 amounts to EUR 6,940.14 gross (corresponding to EUR 5,416.66 as net salary paid to the Claimant and 11,255.46 in the currency of Country D which equals to EUR 1,523.48 as taxes paid to the relevant authorities of Country D at an approximate rate of 28.5%).

16. In this respect, the Claimant provides an “Employee certification” dated 22 March 2017, signed by the Respondent, whereby the latter recognises that the monthly net salary of the Claimant amounts to EUR 5,416.66.

17. The Claimant further underlines that the Respondent did not pay his salary for March 2017, or the taxes for his salary of February 2017 and/or provided him with the relevant certificate of payment of taxes.

18. In this context, the Claimant states that he went back to Country B on 28 March 2017 and provided a flight ticket Country D-Country F-Country B amounting to 9,100 in the currency of Country D.

19. Consequently, the Claimant requests the total amount of EUR 72,153.88, plus 5% interest p.a. as of 21 April 2017, broken-down as follows:

 EUR 4,395.42 gross as outstanding salary for March 2017 (pro rata), amounting to EUR 3,430.55 net to be paid to the Claimant and EUR 964.87 to be paid to the tax authorities;

 EUR 65,005.98 gross as compensation as per art. 10.4 of the contract – corresponding to the remaining salaries from April to December 2017 (EUR 6,940.14 x 9 months = EUR 62,461.26 gross; EUR 48,749.94 net) and pro rata salary for March 2017 (EUR 2,544.72 gross; EUR 1,986.11 net) – amounting to EUR 50,736.05 net to be paid to the Claimant and EUR 14,269.93 to be paid to the tax authorities;

 9,100 in the currency of Country D, approx. EUR 1,229, as reimbursement of the flight ticket;

 EUR 1,523.48 as taxes due for the salary of February 2017.

The Claimant further requests that the Respondent pays “25% of all bonuses (pro quota) that will be recognised to the team during the current sporting season, and order the [Respondent] to provide the relevant information and documentation in that regard”.

The Claimant finally requests that the Respondent bears the full costs of the present proceedings.

20. In its reply, provided after the expiry of the deadline set by the FIFA administration, the Respondent first of all underscores that it acted in an attempt to negotiate a settlement, as stipulated in art. 10.3 of the contract, which is in line with art. 5 of the law of the Country D on labour-dispute mediation and arbitration.

21. The Respondent further states that law of Country D is applicable to the Claimant, referring to art. 12 of the contract in line with art. 3 of the Regulations on the Management of Employment of Foreigners in Country D.

22. Furthermore, the Respondent disagrees with the concept of “net amount” submitted by the Claimant and holds that it always paid the IIT directly to the authorities of Country D and provided proof of such to the Claimant, although this formality not being stipulated in the employment contract. The Respondent further stresses that the Claimant has accepted this course of action, even though he was still a tax-resident in Country B.

23. Pursuant to the Respondent, the Claimant is attempting to recoup an additional 28.5% on top of the compensation because of alleged tax of Country B to be paid. In this regard, the Respondent refers to art. 15 of the “Agreement between the government of Country B and the Government of the Country D for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income” (Country D 5 August 1991; hereinafter: Tax Treaty), which enables Country D to impose taxes on salaries paid to foreign employees for work that is performed in Country D.

24. Therefore, the Respondent asserts that as the Claimant’s employment is exercised in Country D, Country B does not have the exclusive right to tax incomes earned by residents in Country B earning employment income in Country D. Consequently, the Respondent alleges that Country D has the legal authority to impose a 28.5% withholding tax on amounts paid to the Claimant by the Respondent.

25. The Respondent also emphasises that it agrees to pay the relevant IIT in Country D for any amount payable in the future to the Claimant. The Respondent further adds that there is no possible double taxation considering art. 23 of the Tax Treaty which will result in the income tax potentially payable by the Claimant in Country B being reduced by the amount payable in Country D: “where a resident of Country B derives income from Country D, the amount of tax on that income payable in Country D in accordance with the provisions of this [Tax Treaty], shall be credited against the tax of Country B imposed on that resident. The amount of credit, however, shall not exceed the amount of the tax of Country B on that income computed in accordance with the taxation laws and regulations of Country B”.

26. In this context, the Respondent holds that, on 19 March 2017, it initiated the appropriate procedure in order to terminate the contract by mutual agreement and that the Claimant, in refusing the possibility to pursue negotiations, decided to unilaterally terminate the contract without just cause.

27. As a result, on 7 July 2017, the Respondent lodges a counterclaim against the Claimant before FIFA, requesting to be paid a compensation equivalent to three monthly salary in the total amount of EUR 16,250.

28. Alternatively, in the event the Claimant’s claim is accepted, the Respondent deems that such compensation should be limited to three monthly salaries, as mandatorily provided for by art. 47 of the Labour Contract Law of Country D. The Respondent further emphasises that such amount should not be grossed-up so that the club satisfies its tax obligation in Country D.

29. Regardless of the decision, the Respondent also requests that the Claimant pays the amount of 10,000 as legal fees and bears all procedural costs.

30. In his replica, the Claimant mainly maintains that only FIFA Regulations apply to the matter at stake and that art. 12 does not establish law of Country D as being agreed by and between the parties. As a result, the Claimant also stresses that compensation to be paid for breach of contract should not rely on law of Country D but rather on art. 10.4 of the contract.

31. The Claimant further insists that even though the Respondent agreed to pay 28.5% withholding tax on any amount payable in the future (cf. point 25 above), in light of the Respondent’s behaviour leading to the termination of the contract, the Claimant reiterates his request to be awarded compensation in gross so that he can proceed himself with the payment of the relevant taxes in Country B. The Claimant also recalls that he is tax-resident in Country B for the year 2017 and is taxable in Country B for any amount received regarding the matter at hand.

32. In view of the aforementioned, the Claimant reiterates his claim and rejects the Respondent’s counter-claim and additional requests.

33. In its duplica, the Respondent mainly upholds its arguments as well as its counter-claim, and particularly insists on the fact that the Claimant accepted from the outset that the withholding of taxes be made in Country D even though he had kept, already at that time, his tax residency in Country B.

34. Upon FIFA’s request, the Claimant has confirmed that, on 19 September 2017, he signed an employment contract with the club of Country G, Club H, valid as of 10 July 2017 until 31 July 2018 in exchange of a monthly salary in the amount of 20,000 in the currency of Country G, approx. EUR 4,600. The Claimant also adds that he is under a probationary period of three months, which can be extended to six, which thus grants Club H the right to “terminate the contract for any reason without prior warning or any compensation to [the Claimant]”.

II. Considerations of the Players’ Status Committee

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter also referred to as: the Single Judge) analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 21 April 2017. Consequently, the Single Judge concluded that the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution (hereinafter: the Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

2. Subsequently, the Single Judge referred to art. 3 par. 1 and 2 of the Procedural Rules and confirmed that in accordance with art. 23 par. 1 and 4 in combination with art. 22 lit. c) of the 2018 edition of the Regulations on the Status and Transfer of Players, he is competent to deal with the matter at stake which concerns an employment-related dispute between a coach of Country B and a club of Country D.

3. Furthermore, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players should be applicable as to the substance of the matter. In this respect, he referred, on the one hand, to art. 26 par. 1 and 2 of the 2018 edition of the Regulations on the Status and Transfer of Players, and on the other hand, to the fact that the present claim was lodged with FIFA on 21 April 2017. In view of the foregoing, the Single Judge concluded that the 2016 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the case at hand as to the substance (cf. art. 26 par. 1 and 2 of the Regulations).

4. The competence of the Single Judge and the applicable regulations having been established, and entering into the substance of the matter, the Single Judge started by acknowledging the above-mentioned facts as well as the documentation contained in the file. However, the Single Judge emphasised that, in the following considerations, he will refer only to the facts, arguments and documentary evidence which it considered pertinent for the assessment of the matter at hand.

5. Before entering into the substance of the matter, the Single Judge addressed the issue of the admissibility of the Respondent’s reply and counter-claim. In particular, the Single Judge recalled that i) the Respondent filed its reply and counterclaim after the deadline granted by the FIFA Administration to do so without any valid reason and ii) it never paid the advance of costs related to its counterclaim.

6. With the above in mind, the Single Judge deemed it important to refer to art. 17 par. 1 and 3 of the Procedural Rules, according to which an advance of costs (cf. art. 18 of the Procedural Rules) is payable for proceedings before the Players’ Status Committee and the Single Judge by the claimant or counter-claimant respectively, at the moment the claim or counter-claim is lodged. Moreover, art. 17 par. 5 of the Procedural Rules states that if a party fails to pay the advance of costs when submitting a claim or counterclaim, the FIFA administration shall allow the party concerned ten days to pay the relevant advance and advise that failure to do so will result in the claim or counter-claim not being heard.

7. In casu, the Single Judge observed that the Respondent lodged a counter-claim however failed to proceed with the payment of the relevant advance of costs in this regard, even after having been invited by the FIFA administration to do so on 21 August 2017.

8. Therefore, and referring to art. 17 of the Procedural Rules, the Single Judge decided that the Respondent’s counter-claim cannot be heard and could therefore not be admitted to the file.

9. Subsequently, the Single Judge recalled that the Respondent, in spite of having been invited to do so, had failed to present its response to the claim of the Claimant within the relevant time limit set by FIFA, i.e. 26 June 2017. In fact, the reply of the Respondent was only received on 11 July 2017. As a result, bearing in mind the Single Judge’s constant jurisprudence in this regard and in application of art. 9 par. 3 of the Procedural Rules, the Chamber decided not to take into account the reply of the Respondent and established that, in accordance with the aforementioned provision, it shall take a decision on the basis of those documents on file that were provided prior to the deadline set by FIFA, in casu, on the statements and documents presented by the Claimant in his original claim.

10. Having concluded the above, the Single Judge acknowledged that, on 1 January 2017, the Claimant and the Respondent concluded an employment contract valid as from the date of signature until 31 December 2017, by means of which the parties agreed upon the payment by the Respondent to the Claimant of a total salary amounting to EUR 65,000 net.

11. Subsequently, the Single Judge took note that the Claimant argued that the Respondent unilaterally terminated the employment relationship with him, based on poor sporting results of the Respondent’s team under his supervision. Therefore, the Claimant claimed to be entitled to receive, inter alia, compensation for breach of contract from the Respondent.

12. In this respect, the Single Judge noted that the Respondent sent a letter to the Claimant dated 19 March 2017, by means of which the Respondent informed the Claimant that “the team failed to achieve the desired results […]. [The Claimant] no longer serve as Assistant Coach of the [Respondent’s] team. […]”.

13. Having established the above, the Single Judge concluded that the issue to address in the present matter is whether the contract had been terminated by the Respondent with or without just cause.

14. In this context, the Single Judge was eager to emphasise that, according to the well-established jurisprudence of the Players’ Status Committee, 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.

15. Along those lines, the Single Judge underlined that reasons such as mismanagement of the team or poor results are of a highly subjective nature and could thus not be seen as valid grounds to terminate a contract. Furthermore, the Single Judge was eager to recall the well-established jurisprudence of the Players’ Status Committee, according to which the absence of sporting results cannot, as a general rule, constitute per se a reason to terminate a contractual relationship with just cause.

16. In view of the above, the Single Judge came to the conclusion that the reason put forward by the Respondent in its letter dated 19 March 2017 as to why it prematurely terminated the contract does not justify such termination. In other words, the Single Judge decided that the Respondent did not have a just cause to unilaterally terminate the employment relationship between the parties on 19 March 2017 and, therefore, the Respondent is to be held liable for the early termination of the employment contract without just cause.

17. The Single Judge continued his deliberations by examining the consequences of such unilateral termination without just cause by the Respondent.

18. First and foremost, the Single Judge decided that, taking into consideration the longstanding jurisprudence of the Players’ Status Committee, the Claimant was entitled to receive compensation for the Respondent’s breach in the contractual relationship with the Claimant.

19. In this respect, the Single Judge first turned his attention to the remuneration and other benefits due to the Claimant under the existing contract. The Single Judge pointed out that the contract signed between the Claimant and the Respondent was to run for another ten months, i.e. until December 2017, after the termination of the contract occurred on 19 March 2017. Furthermore, the Single Judge understood that for this relevant period, the Claimant was entitled to receive a total salary of EUR 54,166. Consequently, the Single Judge concluded that the amount of EUR 54,166 served as the basis for the final determination of the amount of compensation for breach of contract.

20. In continuation, the Single Judge acknowledged that the Claimant had found new employment on 19 September 2017, for which he was reportedly entitled to a monthly fixed-remuneration in the amount of 20,000 in the currency of Country G. The Single Judge also took note that, however, the Claimant was under a probationary period of three months and that during that period his contract could be terminated “for any reason”.

21. Consequently, in the Single Judge’s view, it was unclear whether the coach was entitled to receive any amount during the probationary period. As such, in accordance with the constant practice of the Players’ Status Committee and in view of the specific circumstances of the coach’s new contract, the Single Judge decided that the Respondent had to pay to the Claimant the total remaining value of the breached contract in the amount of EUR 54,166, which was considered by the Single Judge to be a reasonable and justified amount. The Single Judge felt comforted with his conclusion in view of clause 10.4 of the contract, the validity of which can be left open in view of these considerations.

22. Furthermore, as to the Claimant’s request to be awarded such compensation in a gross amount in order to proceed with the payment of the relevant taxes in Country B, the Single Judge considered that he was not in a position to decide upon the parties’ obligations under the relevant tax law vis-à-vis the relevant tax authorities. As such, the Single Judge did not consider himself in a position to make the gross up of any amounts. Nevertheless, in the Single Judge’s view, the Respondent is liable for the payment of the above-mentioned compensation net of any taxes, as per the Respondent’s previous conduct and the clear wording of the contract.

23. With regard to the Claimant’s claim for reimbursement of the flight ticket, the Single Judge of the Players’ Status Committee alluded to art. 8 of the contract, according to which the Respondent is to provide the Claimant and his family, for each season, with a total of two economy class round trip flight tickets between the Claimant’s hometown and Country D.

24. As a consequence, in accordance with its respective jurisprudence and the evidence on file, the Single Judge granted the Claimant the amount of 9,100 in the currency of Country D as reimbursement of one flight ticket to go back to Country B.

25. In addition, as per the Claimant’s claim for interest and in accordance with his longstanding jurisprudence, the Single Judge granted the Claimant interest at the rate of 5% p.a. as of 21 April 2017 on the respective amount of EUR 54,166 and 9,100 in the currency of Country D.

26. Regarding the Claimant’s request for “25% of all bonuses (pro quota) that will be recognised to the team during the current sporting season”, the Single Judge stressed that the payment and the amount of such bonuses are linked to matches to be played in the future, i.e. after the termination of the relevant contract, and, therefore, are fully hypothetical. Consequently, the Single Judge decided to reject such claim.

27. Finally, the Single Judge referred to art. 25 par. 2 of the Regulations in combination with art. 18 par. 1 of the Procedural Rules, according to which, in proceedings before the Players’ Status Committee, including its Single Judge, costs in the maximum amount of CHF 25,000 are levied. The relevant provision further states that the costs are to be borne in consideration of the parties’ degree of success in the proceedings.

28. In respect of the above and taking into account that the claim of the Claimant has been partially accepted, the Single Judge concluded that both parties had to bear the costs of the current proceedings before FIFA. Furthermore and according to Annexe A of the Procedural Rules, the costs of the proceedings are to be levied on the basis of the amount in dispute. On that basis, the Single Judge held that the amount to be taken into consideration in the present proceedings was between CHF 50,000 and CHF 100,000. Consequently, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 10,000.

29. As a conclusion, in view of the circumstances of the present matter, the Single Judge determined the costs of the current proceedings amounting to CHF 10,000. Consequently, the Single Judge of the Players’ Status Committee decided that the amount of CHF 2,000 has to be paid by the Claimant and the amount of CHF 8,000 by the Respondent in order to cover the costs of the present proceedings.

III. Decision of the Single Judge of the Players’ Status Committee

1. The claim of the Claimant, Coach A, is partially accepted.

2. The Respondent, Club C, has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of EUR 54,166 net of any taxes, plus 5% interest p.a. on the said amount as from 21 April 2017 until the date of effective payment.

3. The Respondent has to reimburse to the Claimant, within 30 days as from the date of notification of this decision, the amount of currency of 9,100 in the currency of Country D, plus 5% interest p.a. on the said amount as from 21 April 2017 until the date of effective payment.

4. If the aforementioned amounts, plus interest as established above, are not paid within the aforementioned deadline, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

5. Any further claims lodged by the Claimant are rejected.

6. The counterclaim of the Respondent is inadmissible.

7. The final costs of the proceedings in the amount of CHF 10,000 are to be paid, within 30 days as from the notification of the present decision, as follows:

7.1 The amount of CHF 2,000 by the Claimant to FIFA. Given that the Claimant has already paid the amount of CHF 2,000 as advance of costs at the start of the present proceedings, no additional amount is requested as costs of the proceedings.

7.2 The amount of CHF 8,000 by the Respondent to FIFA.

7.3 The abovementioned amounts as foreseen in points 7.1 and 7.2 have to be paid to FIFA to the following bank account with reference to case nr. XXX:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U SWIFT: UBSWCHZH80A

8. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances under points 2. and 3. are to be made and to notify the Players’ Status Committee of every payment received.

*****

Note relating to the motivated decision (legal remedy):

According to art. 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS, a copy of which we enclose hereto. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

The full address and contact numbers of the CAS are the following:

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne - Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

E-Mail: info@tas-cas.org

For the Single Judge of

the Players’ Status Committee:

Omar Ongaro

Football Regulatory Director

Encl. CAS directives