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All over the World there are clubs coping with financial problems. A number of them want to solve their difficulties by reducing players’ wages. In Norway there are even clubs that intend to terminate players’ contracts before their expiration date. ‘Very disappointing’, reacts Wil van Megen, FIFPro lawyer. 

These Norwegian clubs want to make use of a clause in the contract that says that a club can terminate a player’s contract with one month’s notice ‘if the club’s economy suffers substantial failure as opposed to a realistically set budget’.

Van Megen refers to the FIFA Regulations on the status and transfer of players (RSTP). ‘According to the RSTP a football contract has a limited time until the end of a season. In principle this contract cannot be terminated without just cause before its expiration date. The contract stability during the first two or three years is guaranteed. For an employer it is not possible to unilaterally change the conditions of the contract.’

In general such a clause can be allowed by national law, continues Van Megen. ‘ But as it is not possible according to the FIFA regulations, we have to review the hierarchy of law. If national law allows the employer to interfere unilaterally in labour conditions, this competence can almost for sure be excluded by contract or by association rules such as FIFA regulations and national FA regulations.’

According to Van Megen, the clause in the Norwegian contracts is against the FIFA RSTP and against the spirit of sports. ‘Moreover it is obvious that the club needs an objective justification for the termination. The question is whether financial problems can be an objective justification and in what stage of the process. This clause seems rather potestative as it does not refer to objective conditions but to the club’s interpretation of the situation.’ 

Next to that, Van Megen questions whether an employer is free to dismiss any player he chooses. ‘In many countries there are regulations that indicate a last-in first-out system in order to determine who is in line to be dismissed. That will not be the way the clubs want to act, I suppose.’

Up till now the FIFA DRC did not have a case in which it is accepted that financial failure is a just cause for a breach of contract. Van Megen: ‘In this case you could say that the limited time contracts and the stability of contract are specificities of sport that have to be respected. Clubs use this argument when a player wants to leave the club without their consent and in reverse it can be used by a player who is about to be dismissed.’

Football tribunals are bound to the FIFA RSTP but also civil courts will have to apply these rules as the parties involved are bound to this by association law. 

On these grounds the premature termination of football contracts should be out of the question.