David Moyes’ sacking - legal rights and options

David Moyes has been sacked after just 51 games as manager of Manchester United. Remarkably the last occasion United sacked their manager was 28-years previously, when Ron Atkinson was removed in 1986. In this article John Mehrzad sets out, from a legal perspective, what will happen next for Moyes.

Remarkably the last occasion United sacked their manager was 28-years previously, when Ron Atkinson was removed in 1986. Although Big Ron’s replacement, Alex Ferguson, did not win a trophy for 4 years (and was reportedly one loss away from being sacked himself in early 1990) what he then went on to achieve at the club is now the stuff of legend. This short article does not propose to hark back to United’s glory-days but rather, from a legal perspective, set out what will happen next for Moyes.

The fixed-term contract regime

Moyes signed a 6-year fixed-term manager contract last July.¹ Within a fixed-term contract regime, unless there is a clear and unambiguous notice clause² or an agreed termination payment clause, the employee is entitled to payment of his salary and benefits for the remaining period of his contract, albeit subject to the principles of mitigation depending on the wording of the contract. This is best exemplified by Henning Berg³ walking away from Blackburn Rovers last year with the entire value of the remainder of his contract, namely £2.25 million, after only 57-days in charge.⁴ However, when Kevin Keegan resigned as Newcastle manager he was unsuccessful in a claim for £20 million as there was a clear contractual termination clause setting out an agreed sum of £2 million to be paid in such a situation.⁵

For Moyes the contractual situation appears clear-cut. According to reports in The Times⁶ his contract contains a 12-month termination payment clause, which apparently equates to a pay-off of £4.5 million. The nuance to this case is, though, reports of a contractual performance “break-clause”⁷, which entitled United to terminate if Champions League qualification was not secured and limited compensation to one-year only in that circumstance. That Moyes was sacked shortly after that threshold was not reached leads a degree of credence to such a clause existing in practice. If so, such a performance related clause may be followed by other clubs in the future, thereby limiting compensation payable to failing managers. Such clauses may see the end of enormous compensation payments for managers instead reducing them to fixed amounts if key objectives, such as European qualification, winning a trophy or promotion, are not achieved or, say, the club is relegated.

Statutory rights