Employment

Transfers

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

League regulations, CBAs, individual player contracts and the common law create the legal framework for individual transfers.

Common contractual terms that may affect the transfer of individual players include:

  • an employer’s right to assign a contract;
  • an employer’s option to renew a contract for a specified term; and
  • ‘no move’ or ‘no trade’ clauses.

League regulations or contractual terms that hinder freedom of employment may be challenged under the common law restraint of trade doctrine. The Competition Act also contains provisions specific to professional sports.

Ending contractual obligations

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

General principles of contract law apply to individuals looking to buy their way out of their contractual obligations to professional sports clubs. A contract may contain an express provision that affords one or both parties the power to cancel the agreement, in some cases subject to certain conditions. For example, certain contracts may allow players to cancel their contract for a predetermined price that the team seeking to acquire the player would pay. This commonly occurs in European football (soccer) leagues. In North America, league regulations may make it difficult for teams to buy and sell contracts on the open market. Trading, rather than buying or selling, of players is more common. Players may request release during the employer ‘buy-out period’ in each season to become unrestricted free agents, but employers may not be obligated to comply with such a request.

Welfare obligations

What are the key athlete welfare obligations for employers?

Athlete welfare obligations in Canada stem from both legislation and the common law. Provincial occupational health and safety legislation applies to virtually all employers in Canada. In Ontario, the Occupational Health and Safety Act outlines the duties of employers. These duties include providing appropriate protective equipment, identifying relevant hazards, appointing competent supervisors and developing corporate policies.

Where injury occurs through regular professional play, a player contract may require a team to pay for lost salary and medical expenses. However, where injury occurs because of a club’s negligence, a player may be able to successfully claim tort damages on the basis of the employer’s breach of the duty to exercise reasonable care. In Ontario, workers’ compensation policy is that coverage will not be provided for any teams or individuals competing in sports.

Canada’s Minister of Sport and Persons with Disabilities recently announced various initiatives aimed at eliminating the presence of harassment, abuse and discrimination in sport. In addition to developing a model Code of Conduct, these initiatives include withholding funding from federally funded NSOs unless anti-harassment, abuse and discrimination policies and practices are strengthened.

Young athletes

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

Restrictions on the employment and transfer of young athletes are found in legislation, league regulations and the common law.

Provincial employment legislation limits youth employment. In the context of high-level sports, education legislation may also affect youth employment by requiring school enrolment. An example of this is British Columbia’s School Act.

Professional sports leagues may regulate age eligibility requirements as well, both with respect to the minimum draft age or in connection with player transfers.

Lastly, minors generally lack capacity under the common law, resulting in contracts they enter into being either void or voidable. However, an employment contract may be enforceable by a minor if it is beneficial to his or her interests.

What are the key child protection rules and safeguarding considerations?

Various provincial legislation in Canada includes protections for children engaged in sporting activities. For example, in Ontario, the Child, Youth and Family Services Act, 2017 imposes a duty to report when there are reasonable grounds to suspect that a child has suffered, or is likely to suffer, harm. Ontario’s Ministry of Tourism, Culture and Sport has explained that this duty applies not only to harm or risk of harm when participating in a sports organisation, but also when the harm or risk thereof arises outside the sports organisation.

Also in Ontario, Rowan’s Law (Concussion Safety) 2018 was recently enacted and imposes various duties on sports organisations, coaches, participants, parents and guardians relating, for example, to the review of concussion awareness resources and the establishment of removal and return-from-sport protocols if a concussion is suspected.

Club and country representation

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

Various employment issues can arise when club athletes also wish to represent their country at international athletic events, such as the Olympics. These issues can include the breach of player contracts that require exclusive service and the allocation of risk relating to player injuries. These issues can be dealt with in the CBA between the Players’ Association and the league, or in player contracts.

Selection and eligibility

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

Eligibility disputes relate to qualifications for admission to a particular level of competition, while selection disputes usually involve the choice of athletes for teams. These disputes typically involve NSOs, which are the governing bodies for various sports in Canada. In order to be funded by Sport Canada, NSOs must have an internal appeal process and allow disputes to be referred to the Sport Dispute Resolution Centre of Canada (SDRCC). The SDRCC offers mediation and arbitration services through its Dispute Resolution Tribunal. The Canadian Sport Dispute Resolution Code provides rules of procedure for the Tribunal. Parties to arbitration under the Code waive their right to seek alternate relief from other judicial bodies.

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

Generally, subject to the application of a tax treaty (as discussed below), a non-resident athlete who competes in Canada is subject to Canadian income tax on income earned from activities performed in Canada and is required to file a Canadian income tax return to report that income. The athlete may also be subject to withholding at source on payments made to the athlete in respect of activities performed in Canada. The portion of an athlete’s income that is earned from activities performed in Canada will depend on his or her personal circumstances, but may include some of his or her signing bonus or other lump-sum payments.

Foreign athletes competing in Canada should determine whether Canada has a tax treaty with their country of residence. Most of Canada’s tax treaties generally follow the OECD Model Convention with respect to the taxation of athletes, such that Canada is generally permitted to tax athletes on their income from activities in Canada. However, there are important variations among Canada’s tax treaties, including in some treaties exemptions for athletes earning only small amounts in Canada. Because of the significant integration of the Canadian and US sports industries, the Canada-US Tax Convention provides a unique exemption from Canadian taxation for a US athlete employed by a team that plays regularly scheduled games in Canada and the US.