Employment

Transfers

What is the legal framework for individual transfers? What restrictions can be placed on individuals moving between clubs?

The relationship between professional athletes and their clubs is based on employment contracts entered into by the parties, as set out in paragraph 611a of the BGB. Therefore, when a player is transferred, the player’s employment contract with the former club has to be terminated and an employment contract with the new club entered into. Although the employment contract can, in general, place restrictions on the individual, these restrictions are limited by paragraph 138 of the BGB. This paragraph states that any legal transaction contrary to public policy is void. Additional restrictions can arise from other sources, such as the UEFA Club Licensing and Financial Fair Play Regulations, transfer bans imposed on the club and the Regulations on the Status and Transfer of Players. Further restrictions for minors exist (see article 19 of the FIFA Regulations on the Status and Transfer of Players).

Ending contractual obligations

Can individuals buy their way out of their contractual obligations to professional sports clubs?

In light of the principle of pacta sunt servanda, individuals are usually not allowed to buy their way out of the contractual obligations owed to their professional sports clubs. One way around this, however, would be to include a buy-out clause in the employment contract. Another way to mutually end the contractual relationship is to enter into an agreement to terminate it.

Welfare obligations

What are the key athlete welfare obligations for employers?

The employer’s duty of care includes a wide range of obligations regarding the safeguarding of the welfare of the employer’s athletes (employees). One example is found in paragraph 618 of the BGB, according to which the employer is obligated to safeguard the safety and health of the employees. The employer must therefore instruct and inform its employees, take care of the belongings they bring with them and protect their basic personal rights.

Young athletes

Are there restrictions on the employment and transfer of young athletes?

The employment of minors is restricted under the Act to Protect the Employed Youth (JArbSchG) and under the Child Labour Protection Regulation (KindArbSchV). The aim of these statutes is to protect young people under the age of 18 from work that is too difficult, too dangerous or unsuitable for them. Special provisions of a federation may also apply, such as article 19 of the FIFA Regulations on the Status and Transfer of Players, which prohibits the international transfer of minors, apart from in exceptional cases.

What are the key child protection rules and safeguarding considerations?

As stated above, the key child protection rules in Germany are found in the JArbSchG and the KindArbSchV. The former contains special stipulations regarding the number and length of work breaks and leisure time, and it also limits the number of working hours for underage employees. Section 8(1) of the JArbSchG states that minors are only allowed to work eight hours per day, 40 hours per week, and between the hours of 6am and 8pm. There is no explicit exemption in sports law from these requirements. However, it is currently being discussed whether article 14(7) of the JarbSchG, which states that in the field of media and arts minors are allowed to perform until 11pm, applies to athletes. The duty of care the employer owes to minors is more comprehensive than for adults.

Club and country representation

What employment relationship issues arise when athletes represent both club and country?

Athletes that represent both their clubs and their countries still have contractual relationships with their clubs. Clubs are obligated to send their registered players to their national teams and the players are obligated to accept invitations from national teams. During their time with their national team, players continue to be paid by their clubs, which are also responsible for insuring them. Any bonuses paid by the national associations to the national players are done on a voluntary basis. Therefore, the clubs still bear the major risk (eg, injuries) during the games with the national teams. Although a system of remuneration for the clubs exists, conflicts often arise between the national associations and the clubs with respect to who is liable for a player’s injuries. From a legal point of view, the club’s obligation to send the players to the national teams is questionable at least from an antitrust point of view, as it could be perceived as an abuse of a market-dominating position.

Selection and eligibility

How are selection and eligibility disputes dealt with by national bodies?

Athletes who meet the specific selection requirements can claim their proposals for selection from their respective sporting associations. Based on these proposals, the German Olympic Sports Federation, which is recognised by the International Olympic Committee (IOC) as the NOC in accordance with article 44.2 of the Olympic Charter, is competent to submit entries for competitors at the Olympic Games. The IOC, in a third step, is competent to authorise the submitted entries. Appeals brought by an athlete against an unlawful nomination will generally be dealt with by an arbitration court, provided that an arbitration clause exists. If this clause does not exist, the state courts have jurisdiction to settle the dispute.

What are the key taxation issues for foreign athletes competing in your jurisdiction to be aware of?

According to paragraph 1(1) of the German Income Tax Act (EStG), athletes are subject to income tax if they reside in Germany (paragraph 8 of the Tax Code) or if their habitual residence is in Germany. According to paragraph 9 of the Tax Code, an athlete’s habitual residence is in Germany if he or she resides there for more than six months in a given calendar year, whereby short-term interruptions are irrelevant. The income categories in paragraph 2(1) of the EStG are listed according to sources of income, which include commercial income, income from self-employment or income from dependent employment. The income from the different sources is subject to different taxation rules. These rules determine how, when and at what rate the income is to be taxed. This calculation is based on the total worldwide income of the athlete residing in Germany. Double taxation of income earned outside Germany (which is also taxed in the foreign country) is generally avoided on the basis of paragraph 34c of the EStG or on the basis of double taxation treaties with the foreign countries. For foreign athletes who do not reside in Germany, only the income that has a special domestic connection to Germany is taxable (paragraph 49 of the EStG).