By Steve Austin Nwabueze:
The sports industry has grown exponentially, globally. The industry is currently regarded as one of the largest industries globally in terms of employment and revenue. It is driven by a large worldwide demand. The total worth of the sports industry is estimated to be over US$800 billion. Just under half of this amount is generated by the spectator sports sector. So, competitive sports and all the businesses around it, create roughly over 250 billion USD in revenue each year.
The Nigerian sports industry is no exception even though the widely acknowledged challenges of commercialization still dangles over the Nigerian sporting landscape like the sword of Damocles. Indeed, the Nigerian Professional Football league has been involved in commercial initiatives that seek to generate more revenue for the league and the clubs.
The recent deal with Redstrike TV, therefore, marked a watershed in this gradual commercialization of the football league in Nigeria. Coterminous with the quest for commercialization of the football league is the need to attract quality players who are outside the shores of this country, a robust scouting system and careful contract drafting. The growth of the sports industry invariably throws up a broad spectrum of some interesting contract clauses that have worked their way into sports law practice.
Understanding the scope and intent of these clauses is necessary to avoid fractious contract wrangles between the club and the player. Unfortunately, the quest to play professional football robs the unsuspecting player of the presence of mind to digest the key clauses in the contract often in tiny prints. Sadly, the player who would have availed himself of the services of a lawyer to break down the clauses in the contract is either in a hurry to sign his professional contract or unbothered about the need to seek some professional opinion on the issue.
The relevant clauses are often a culmination of the interplay betweeen individual employment and sponsorship contracts, league constitutions, tournament rules, and in the collective bargaining agreements between owners and the players where applicable. Contract clauses have played a significant role in the growth of the sports industry and professional football in particular. The football club as the employer is often keen to insert exculpatory clauses that would limit its liability as much as possible for the entirety of the contract. Analyzing contract clauses in sports requires an understanding and appreciation of the interrelationship between judicial decisions arising from the general principles of contract law on the one hand and the ever-evolving employment law practice on the other.
This article, therefore, analyzes the statement credited to Plateau United Football Club General Manager stating that all the players and coaching staff have been placed on half-salary following their dismal start to the season. We analyze the propriety of this action in the light of emerging employment law trends and the football jurisprudence. This analysis is firmly circumscribed within performance clauses in football.
General terms of contract
The legal status of an athlete who earns a living from participating in sport is determined in Nigeria by national legislation and the legal tests outlined in case law. Some athletes will be independent contractors, others will be workers and some will be employees. Legal status is important because it characterizes the contractual relationship between the athlete and the entity for which he or she provides services; the nature of that contractual relationship will determine the rights and obligations that arise. A professional athlete will almost always provide services under a contract with a club, competition organizer or national federation.
The atypical nature of the services provided, the environment in which those services are applied and the perception of sport as a past time, entertainment or “fun”, or the view that an athlete is playing for the “honour and glory” of representing a country, team or club, may give the impression that an athlete is not an employee or a worker.
The law in Nigeria, however, remains that the relationship between a master and his servant or employer and his employee, is a contractual one and it is governed and regulated by the terms and conditions of the contract between them. Generally, the rights, obligations and liabilities of the parties to such a contract, are to be determined on the basis of the terms and conditions to which they have freely and voluntarily agreed to govern and regulate the relationship between them.
In addition, the law generally, does not permit a Court to alter, by subtraction or addition, or re-write the terms and conditions of a contract entered into by the parties, on the pretext of exercising a judicial discretion that completely ignores the sanctity of their agreement. It is widely recognized in the United Kingdom that an employment relationship is a special kind of contractual relationship that contains express and implied terms, obligations and duties that may not be present in other types of contract. In Braganza v BP Shipping and Another, a case which concerned an employer’s refusal to pay a death in service benefit, the United Kingdom Supreme Court acknowledged that an employment contract is “of a different character from an ordinary commercial contract”, and “had specialties that do not normally exist in commercial contracts.”. Those specialties include implied terms such as the mutual term of trust and confidence, an employee’s duty of fidelity or loyalty, and in some situations, an implied obligation on the employer to provide work. Employment contracts also have “significant social and economic implication…affect a high proportion of the adult population and have a profound impact on their personal lives and on their relationships with others”. It is also widely accepted that an employment relationship is characterized by power disparities that almost always favour the employer. In Braganza the UK Supreme Court referred to the “significant imbalance of power between the contracting parties as there often will be in an employment contract.” In Eastham v Newcastle United Football Club the High Court referred to the inequality of bargaining power in a professional football player’s relationship with a club. It highlighted the role of the Court as being to ensure that restrictive covenants agreed in circumstances of unequal bargaining power are reasonable. The court held in part as follows:
The authorities make clear the distinction between contracts entered into by vendors and purchasers of a business, where the parties are of equal strength, and contracts between master and servant when often they are not; and it is relevant that in the football industry players commonly enter into their first contract either while they are under 21 or shortly afterwards, and that wherever they may subsequently go, within the Football League, there is only one form of contract they can sign. The Court must be careful to see that contracts made in these circumstances are justifiable in the interests of both parties.
This imbalance of power in sports employment contracts has been recognized both by the regulatory bodies and the courts and has made it more heavily regulated than other commercial contracts. National Legislations of many countries now provide for minimum employment rights to assist in redressing the power imbalance in the relationship. League bodies now stipulate not only the standard clauses to be found in employment contracts with players but also require that copies of these contracts be kept with the league bodies. Collective bargaining agreements have now become veritable instruments used by the Players’ Union to keep the employers in check with a view to achieving parity between the bargaining power of labour and management. The right to strike and take other industrial action to bring economic pressure to bear on an employer in support of demands for better working conditions is now recognized as a fundamental right of workers in some international legal instruments and the national law in some countries.
The courts recognize that power disparities arise in an employment relationship and are relevant to the enforceability of a contract or contractual clause. Weaker bargaining power may undermine a party’s ability to consent meaningfully to a contractual term. As earlier stated, freedom of contract is a fundamental tenet of contract law and the courts are usually reluctant to intervene in private contractual relations. But the principle is not absolute and for reasons of public policy the courts have on several occasions intervened to prevent an abuse of private power. The nature of the intervention depends on the contractual terms and the context in which the power is being exercised. Much would, therefore, depend on the peculiar fact pattern of each case. The employment relationship represents one area where the court has been extremely circumspect in upholding certain provisions in an employment contract and in which power disparities have led the court to intervene to stop a wily employer from invoking certain overreaching provisions in an employment contract. The sports industry is replete with cases where this commendable judicial attitude has been demonstrated.
Emerging trends in the Nigerian labour/employment law
Even though sports and football contracts in particular, contain internal remedial mechanisms for the resolution of sports disputes, the National Industrial Court of Nigeria reserves the exclusive jurisdiction for the resolution of employment disputes between the player and his club. The court has, accordingly, developed commendable labour law principles that have ameliorated the plight of the employee. Even though these principles have not been applied in a sporting sense, these principles nonetheless apply to sports. This milestone has been achieved with the advent of what is usually termed “unfair labour practices’. Unfair Labour Practices are practices that do not conform with best practice in labour circles as may be stipulated by domestic or international legislations and practices. It can also be described as any improper practice that relate to remuneration, job security, health and safety, social security and working hours amongst others. There is no end to what the court may hold to constitute unfair labour practice. The test appears to be whether such act is in tandem with international best practice.
There have been instances where the Courts have held certain acts or conducts to be unfair labour practices. In Mr. Olabode Ogunyale & ors v. Globacom Nigeria Ltd, the NIC held that it is unfair labour practice for an employer to compel an employee to bank with a specified bank chosen by the employer. It is unfair labour practice for an employer to dictate to an employee where to invest his/her computed gratuity benefit-see Aghata N. Onuorah v. Access Bank Plc. In Mrs. Abdulrahaman Yetunde Mariam v. University of Ilorin Teaching Hospital Management Board & anor, the NIC again held, to be unfair labour practice, an employer’s act of holding the certificates of an employee as security for the employment of the employee on terms that it will not be released until the employer no longer desires the services of the employee. A vindictive suspension and/or vindictive denial of promotion will also amount to unfair labour practice.
In Mix and Baker Flour Mills Industries Ltd v. NUFBTE, the NIC whilst holding an employer’s dislike for trade unionism to amount to unfair labour practice stated that “To be unfair, it must be established that the practice does not conform with best practice in labour circles, as may be enjoined by local and international experience. “
Non-Compete/Restrictive Clauses
In 7th Heaven Bistro Limited v Amit Desphande, the court declared as ‘inhuman and stifling’, and consequently found to constitute an unfair labour practice, the restrictive covenant that ‘for whatever reason even if his employment is terminated [the employee] shall not accept employment with any other employer in Nigeria … for a period of (3) years from the date of termination or resignation as the case may be’
In Infinity Tyres Limited v Sanjay Kumar the ‘non-compete clause’ restricting the 1st defendant from joining ‘any other company in Nigeria for one year’ upon cessation of work employment with the claimant company was considered too wide and consequently unreasonable and unenforceable when the economic activity sought to be restricted was extended to cover “any other company in Nigeria”.
Discriminatory treatment
In Darlington Eriseye Lawson v Keystone Bank Limited and Jacob Folarin v Union Assurance Co. Ltd, it was found that the practice of an employer paying ex-gratia to some of its ex-employees whose employments were determined in the same or similar circumstances with that of the claimant (without making same payment to the claimant) was discriminatory and amounted to unfair labour practice.
Irregular Termination/Dismissal of Employment
The purported disengagement of an employee not following laid down process, coupled with an unlawful denial of earned promotion was frowned at in Dr. Kayode Afolayan v UNILORIN; decision made on November 27, 2018, per Adewemimo J.) See also Mrs. Gloria Chukwudi-Nneke v Registered Trustees of Dowen College, Lagos.
What may be categorized as ‘unfair labour practice’ is not closed and much would depend on the facts of each case but regard would be had to the disparities in bargaining power between the parties.
The curious case of Plateau United
As indicated, Plateau United Football Club put out a statement on its official twitter handle confirming that the entire first team and coaching staff have been placed on half salary following the team’s dismal start to the season. While the author acknowledges that he is not privy to the terms of Plateau United players’ contract, the reports around this development suggest that the club is invoking a clause in the employment contract which empowers it ‘to sack, suspend or deduct the salaries of the players in the event of poor performance”. If this hypothesis is correct, it is pertinent to briefly analyze the relative strengths and weaknesses of the club’s position. While the club may well be within its rights to rely on this provision, particularly regarding the fact that there are no vitiating factors to set aside the contract, other considerations such as the disparity in bargaining powers of the parties would be considered by the court in arriving at a decision one way or the other. However, standard employment law practice in sports contracts does not support this position. It is common to insert performance-related bonuses in players’ and managers’ employment contracts which entitles the players and managers to receive a liquidated payment as bonuses for promotion or attaining a major milestone like winning the title. Conversely, another performance-related clause could entitle the club to reduce the wages and salaries of the coaching and playing staff upon the team’s failure to gain promotion and/or relegation to a lower tier of the football league.
This point is illustrated by the case of Manchester City Football Club Plc v Royle. The case concerned the interpretation of ambiguous expressions in a liquidated damages clause. This provided for different termination payments to be made to the manager depending on whether the club was in the Premier league or the EFL Championship at the date upon which his employment was terminated. The manager had been dismissed following the conclusion of the 2000/01 season after the club had completed its fixtures and been relegated but before the full season had ended. When the club’s relegation from the Premier League was confirmed, the manager was paid compensation on the basis that he was a First Division manager. He contended that he was still a Premier League manager and was therefore entitled to a higher sum in liquidated damages. The manager succeeded in the High Court but the Court of Appeal overturned the ruling, holding that, for the purposes of determining the appropriate rate of liquidated damages, the club was a First Division club with the consequence that the lower rate was payable. Part of the considerations by the club was the fact that having been relegated from the Premier League, the club was forced to relinquish its shares in the Premier League and was therefore obliged to pay the liquidated damages payable by a club in the Championship.
There is no direct authority within the fact pattern here. Regard would, therefore, be had to peculiar circumstances of the case and the standard employment practice in sports. A performance-related clause that entitles the club to reduce the salaries of the coaching and playing staff after just few games in the season is not only an anomaly but unduly punitive and may well be considered so by the court once a robust challenge is put up to its invocation. The coaching and playing staff may seek to challenge the application of this clause on the basis of the disparity in bargaining power between the staff and the club. Secondly, a performance related clause that seeks to reduce the staff’s salaries is not one of the standard clauses required in form 7 in the appendices to the NPFL framework Rules even though the parties are always at liberty to agree to insert one. The players may therefore contend that a performance related clause that entitles the club to unilaterally reduce the staff’s salaries as a result of the team’s dismal form in the league before the conclusion of the league season is a violation of the minimum wage provisions of the NPFL Rules (where the reduction is below the approved minimum wage of N150, 000. 00). Ultimately, the strongest challenge to this practice is by invoking the ‘unfair labour practice” principle. Put differently, the playing and coaching staff of Plateau United Football Club can challenge the proposed decrease in salaries on the ground that it amounts to an unfair labour practice for the employer to reduce the salaries of the employer at will on the grounds of poor performance given the fact that the form of a football team is always transient.
As a post script, poorly couched performance-related clauses like the one just analyzed is not only bad for the clubs but for the league as well. It makes a mockery of our claims to commercializing the football league and ultimately, stifles investment in the league. The LMC therefore needs to rein in the clubs and ensure that such over-reaching clauses do not find their way in professional football contracts. The playing and coaching staff need to engage the services of lawyers to review every employment contracts given to them to sign. The clubs on their part should engage the services of in-house counsel who would review and make appropriate recommendations on draft employment contracts prepared by the clubs to ensure the contract conforms with international best practices and prevailing labour jurisprudence.
Steve is a dispute resolution & sports lawyer based in Lagos and can be reached on [email protected].
End Notes
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iv. Why the Sports Industry is Booming in 2020 (and which key players are driving growth, Torrens University Australia (Feb 10, 2020).
v. Leanne O’Leary ‘Employment and labour relations Law in the Premier League, NBA and International Rugby Union” Asser International Sports Law Series – page 4
vi. See NEPA v. Adesaaji (2002) 17 NWLR (797) 578: Momoh v. CBN (2007) 14 NWLR (1055) 504: Osakwe v. Nig. Paper Mill Ltd (1998) 10 NWLR (568) 1: PAN v. Oje (1997) 11 NWLR (530) 625
vii. See Calabar Cement Co. Ltd v. Daniel (1991) 4 NWLR (188) 750: Katto v. CBN (1999) 6 NWLR (607) 390
viii. See Autoclenz Ltd v Belcher and Others [2011] UKSC 41 (SC).
ix. See Braganza v BP Shipping Ltd and Another [2015] UKSC 17.
x. Braganza, supra n 5, para 32.
ix. Braganza, supra n 5, para 54.
xii. See Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666 (EAT). Approved in: Lewis v Motorworld Garages Ltd [1986] ICR 157 (CA) and Malik v Bank of Credit and Commerce International SA (in compulsory liquidation) [1998] AC 20 (HL).
xiii. See Hivac v Park Royal [1946] Ch 146 (CA).
xiv. See Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209 (HL), William Hill Organisation Ltd v Tucker [1999] ICR 291 (CA), Langston v Amalgamated Union of Engineering Workers (No2) [1974] ICR 510 (NIRC) and Provident Financial Group plc and Another v Hayward [1989]ICR 160 (CA).
xv. See Geys v Société Générale [2012] UKSC 63, para 118 (Sumption LJ).
xvi. Braganza, supra n 5, para 18.
xvii. [1964] Ch 413 (ChD).
xviii. Ibid., p. 428.
xix. For instance, the LMC/NPFL Framework Rules for the 2019/2020 season in clause 6 of the Administrative Structure of the league stipulates that registers of the contracts of managers of the NPFL Clubs would be kept and copies of the contracts of the managers kept by the LMC. See https://docs.google.com/
xx. It is conceded that this right is hardly exercised in practice by football players who have over the years adopted a conciliatory posture to such issues thanks to the use of collective bargaining agreements.
xxi. Braganza, supra n 5 (held an employer is obliged to exercise a contractual power of decision- making in good faith and not in an arbitrary, capricious, irrational or unreasonable manner), Nordenfelt Ex p. Maxim Nordenfelt Guns and Ammunition Co, Re [1895] 1 Q.B. 151 (HL), Eastham, supra n 14 and Grieg v Insole [1978] 1 W.L.R. 302 (ChD) (all held that a clause or rule in a private contract that unreasonably deprives an individual of the opportunity to earn a living and deprives the public of the benefit of the individual’s labour may be contrary to public policy). See also Sedley 1994, Forsyth 1996 and Laws 1997.
xxii. Unreported Suit No. NIC/LA30/2008
xxii. [2015] 55 NLLR (Pt. 186) 17
xxiv. [2013] 35 NLLR (Pt. 103) 40
xxv. (2004) 1 NLLR (Pt. 2) 247
xxvi. (Unreported suit No: NICN/LA/396/2015 judgment delivered on September 27, 2018; per Peters J.)
xxvii. Unreported suit No: NICN/LA/170/2014 judgment delivered on October 7, 2018; per Kanyip J.),
xxviii. (Unreported suit No. NICN/IB/48/2016; decision made on 2018-10-09, per Kola-Olalere J.)
xxix. (Unreported suit No. LA/08/2016; decision made on October 25, 2018, per Amadi J.)
xxx. (Unreported suit No: NICN/IL/16/2017)
xxxi. (Unreported suit No: NICN/LA/351/2014, judgment delivered on 2018-05-10, Peters J.)
xxxii. (2005) ECWA Civ 195
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