What are the legal obligations on sports clubs looking to dismiss an underperforming manager?

The performance of sports managers is a constant subject of discussion both in the media and amongst fans, with many holding strong views over whether an individual is properly performing in their role.

Recently, there has been great debate over the performance of various football managers, including Jose Mourinho, after his departure from Chelsea following their run of disappointing results, and in recent weeks Louis van Gaal of Manchester United.¹ Similarly, the English rugby team’s underwhelming performance in the Rugby World Cup prompted a whole host of questions about Stuart Lancaster’s future prior to his decision to step down.²

While passions run deep in these cases, poor performance by managers also raises some interesting questions about what legal obligations clubs have in respect of dismissing an underperforming manager and – perhaps more importantly – whether these can ever realistically be followed where that poor performance is having an immediate and ongoing effect on the club’s results.

Capability under the Employment Rights Act 1996

Managers of professional sports teams are usually employees, and are therefore entitled to various employment rights.

This includes the right not to be unfairly dismissed.³ Sections 98(1) and (2) of the Employment Rights Act 1996 (the “Act”) provide that there are five potentially fair reasons for an employer to dismiss an employee.

One of these reasons is capability, which includes a person’s competence to perform the job they have been employed to do. Therefore, if someone is unable to perform their role to the required standard this may be a fair reason for terminating their employment. For this reason, dismissals of poorly performing employees are usually by reason of capability.

However, in certain circumstances aspects of poor performance may also overlap with misconduct, for instance if a manager failed to follow reasonable instructions from the club or failed to attend training sessions. In this case, the club would consider dismissing the employee for misconduct, another potentially fair reason under the Act, rather than capability. In addition, where the manager’s poor performance is precipitated by, or has resulted in, a complete breakdown in the relationship between them and the players or the club, the club may be able to argue that this breakdown is sufficient reason to justify their dismissal independent of any poor performance.⁴

However, the Act provides that whether a poor performance dismissal for one of the five reasons is fair or unfair depends on the particular circumstances of the case and on whether the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the particular employee.

In cases relating to capability, an employer will usually only be considered to have acted reasonably if it can be shown that:

1. the employee was aware of the standard expected of them;
2. the employer followed various steps aimed at giving the employee the chance to improve their performance before making a decision to dismiss for that reason; and
3. if there is not sufficient improvement, the employer held a proper disciplinary meeting and gave the employee the right of appeal.

These further considered below. As will be clear, the process a club will be required to follow in order to prove that it acted fairly and reasonably can be lengthy and onerous. For this reason, a club will inevitably want to consider whether there are alternatives ways of terminating the manager’s employment.

Step 1: knowing the standard required

Firstly, in respect of making sure the employee is aware of the standard required of them, employees in very senior roles are expected to be more aware than most of what is required of them and to be capable of judging for themselves when something falls below the required standard.

Therefore a professional sports club would probably be entitled to assume that its manager was generally aware of the level of performance expected of them. However, any particular requirements, such as specific targets for results, should be clearly set out so the manager is aware of them.

The standard required of a manager could encompass not only technical aspects of the role, but also more subjective aspects such as their attitude or ability to interact with players, colleagues or clients. Again, a club would probably not be expected to have specifically drawn this to the manager’s attention, as it should go without saying that this is an important part of their role.