Former Newcastle United Football Club (Newcastle) manager, Kevin Keegan, has been successful in his constructive dismissal claim against his former employer.

The Premier League Arbitration Tribunal has decided that Newcastle must pay £2million in compensation plus interest.

In order to succeed with his constructive dismissal claim, Keegan had to show that his contract of employment had been materially breached by Newcastle, that he had not accepted that breach of contract and had resigned as a result.

Despite the contract of employment being silent on the point, Keegan argued that it had been agreed that he would have the final decision on the signing of players. On the other hand, although Newcastle admitted that it did not expressly state to Keegan that this was not the case, it argued that Keegan was fully aware of the club's intention to adopt a continental structure. Newcastle further contended that it was implicit in such a structure that Keegan would not have complete control over the signing of players. Rather, the Director of Football and Vice President would have the final say on transfers.

The Tribunal preferred Keegan's argument. Accordingly, the loan signing of Uruguayan, Ignacio Gonzales on 31 August 2008, against Keegan's wishes, amounted to a fundamental breach of contract that entitled Keegan to resign on 4 September 2008.

In preferring Keegan's version of events, namely that he was entitled to expect that he had control over the signing of players, the Tribunal firstly looked to what the contract of employment said. This stated that Keegan "will perform such duties as may be usually associated with the position of a Manager of Premier League Football Team (including but not limited to those specific duties set out in Schedule 1) together with such other duties as may from time to time be reasonably assigned to him by the Board." Schedule 1 then provided that "Kevin Keegan will be responsible for the training, coaching, selection and motivation of the Team."

The Tribunal considered that it was not clear from the contract and from the meeting at which Keegan was offered the job, that he would not have the final say on signings.

The Tribunal also noted that Newcastle's argument that it was implicit in their continental structure for the manager not to have the final say on transfers, was fatally undermined by Keegan's replacement (Joe Kinnear) being given the final say on transfers despite the structure of the Club being the same.

As to the question of whether Keegan resigned as a result of this breach of contract, the Tribunal recognised that Keegan was also unhappy with the small size of his squad and the lack of significant player purchases. However, the Tribunal was satisfied that the trigger for his resignation was the Gonzales signing.

It is likely that football clubs will now seek to ensure that the parameters of a manager's signing responsibilities are expressly set out in writing in order to reduce the scope for this type of claim to be brought.