What is the legal framework for individual transfers? What restrictions can be placed on individuals moving between clubs?
UK law is underpinned by the principle that individuals are free to ply their trade as they choose. In sport, transfer systems broadly arise through the rules of NGBs. Many sports operate a ‘registration’ system where players are required to be registered with their clubs and are only eligible to play for another club following a transfer of their registration, leading to organisations acquiring the right to transfer the registration from another club in order to then enter into a contract of employment with the individual.
Any transfer system imposed by an NGB must still comply with UK employment laws and EU laws on freedom of movement. In the case of the latter, any restriction on an individual’s basic free movement rights is only permissible where justified by a proportionate and legitimate aim. The justification is often made that the regulations help ensure competitive balance, preventing players from leaving a team at any time, which could destabilise an organisation and the relevant league. While various cases have considered free movement in the past, occasionally leading to rule changes within individual sports, uncertainty remains as to whether such restrictions are in fact compatible with UK and EU law.Ending contractual obligations
Can individuals buy their way out of their contractual obligations to professional sports clubs?
There is no statutory mechanism for professional athletes to formally buy their way out of their employment contracts and we are not aware of any attempt (or desire) by any of the major sports NGBs in the United Kingdom to provide such a right within the regulatory framework of their sport. However, individuals and organisations remain free to include bespoke termination rights within a contract whereby an agreement may be terminated on payment of a contractually agreed sum.Welfare obligations
What are the key athlete welfare obligations for employers?
Sports organisations have a legal duty to take reasonable care of their employees’ health and safety (including an employee’s mental health) and to take reasonable steps to provide a safe workplace. The duty arises through tort, statute and as an implied term of an employment contract. Organisations, therefore, need to carefully consider how they can take reasonable steps to protect their employees both on and off the field.
Employers are further required to protect their employees from bullying, abuse, discrimination and harassment. Organisations can be liable for the acts of those in supervisory positions (eg, coaches or managers) and for any failure to address negative actions by an employee’s colleagues. Sports organisations should be aware that these duties are uniform across industries and the fact that certain behaviours may be common within sport (eg, aggressive management styles) will not lower the expected duty of care.
Concerns over athlete well-being led to the Department of Culture, Media and Sport commissioning a Duty of Care in Sport Review, which was published in 2017. The report recommended additional changes to protect athletes, particularly those not formally employed by organisations that are unable to rely on the implied rights thereunder. Recommendations included the appointment of a Sports Ombudsman to hold sporting organisations to account, though many of these changes are yet to be implemented.Young athletes
Are there restrictions on the employment and transfer of young athletes?
Children in the United Kingdom can only work full-time upon reaching the age of 16 and having completed their final school year, and part-time from the age of 13. Children under 13 may only be employed in performance roles requiring a performance licence (including paid sporting activities). Restrictions also apply to the hours children can work relative to their age.
Throughout sport, organisations have recognised the value of securing future talent at a young age and are devoting ever-increasing resources to managing academies and talent scouting to help secure the potential stars of the future. NGBs have recognised the pitfalls of money being thrown at young athletes, many of whom will never make it to the upper levels of professional sport. Many NGBs have therefore sought to implement transfer restrictions to protect minors and ensure that organisations cater for their wider needs, such as their education. In football, for example, the FA, Premier League and English Football League have implemented various rules to police the movement of minors, including preventing players from signing professional contracts until 17, restricting when youth players can move between clubs domestically and preventing intermediaries from receiving monies in connection with youth player registrations and transactions.
What are the key child protection rules and safeguarding considerations?
The government has largely taken a non-interventionist approach to child protection within a sporting context. Nonetheless, organisations cannot ignore child safety concerns. Organisations managing the training and development of young athletes will owe a duty of care to such individuals, which is generally recognised to be a higher duty than for adults. Further, organisations need to consider their employees carefully, for whose actions they can be liable. The Safeguarding of Vulnerable Groups Act 2006 also requires that any individuals who are involved in a regulated activity (capturing both professional and voluntary sports coaching) and are subsequently removed because they may have caused, or may cause, harm to a child, are referred to the Disclosure and Barring Service (DBS). It is an offence to employ anyone who has been barred by the DBS. Many sports also operate their own child protection rules, placing stringent criteria on sports clubs and actively monitoring the implementation of child protection policies, requirements for parental permission and even a right to ban participants who are considered to be a potential risk to child safety. Many organisations also work alongside the NSPCC’s Child Protection Sport Unit (CPSU), which operates in partnership with Sport England, Sport Northern Ireland and Sport Wales. The CPSU provides guidance to sports clubs on child protection and has developed its own safeguarding standards, with the aim of providing a national benchmark for good practice in sport.Club and country representation
What employment relationship issues arise when athletes represent both club and country?
Subject to complying with general UK employment law principles, NGBs are generally free to regulate the employment frameworks within their sport, which will usually include the relationship between club and country and the inevitable conflicts that arise within this.
Off-field activities, such as promotional work, can be a particular issue. Athletes can often be required to promote brands for their national teams who are competitors of their domestic club’s or even personal partners or sponsors. Further, disciplinary matters can bring club and country into conflict, in particular, as to where jurisdiction lies for dealing with any infractions.
Beyond a sport’s basic rulebook, many NGBs will enter into a separate contractual relationship with their national players, covering their appearance fees, promotional activity and disciplinary processes. This relationship can provide the international team with additional control over the player and direct rights of action against them for any rule infractions. Certain sports may also operate a ‘central contract’ framework whereby the NGB has the primary employment relationship with the athlete. The terms and operation of such structures are often heavily negotiated between player unions and NGBs through collective bargaining arrangements. These can also be supplemented by agreements between NGBs and the domestic leagues (and their member clubs), managing issues such as conflicts in player availability for competing fixtures and applicable compensation or extra funding in consideration of a league’s agreement to such arrangement.Selection and eligibility
How are selection and eligibility disputes dealt with by national bodies?
Selection and eligibility for national teams will be determined by the rules of the national NGB for each sport (albeit that international federation rules may also supplement these). These will provide for how any disputes are to be settled and the relevant appeals body for review of any selection decisions. Most organisations will designate an independent arbitrator as a final appeals body, such as Sports Resolutions or the CAS. See 'Court enforcement' for details of where appeals may alternatively be made to the national courts.
What are the key taxation issues for foreign athletes competing in your jurisdiction to be aware of?
Foreign athletes living and working in the United Kingdom under a UK employment contract will likely become UK tax residents and be subject to UK tax on their worldwide income. UK employment income received will usually be taxed through PAYE deductions made by their employer.
Although the starting point for UK tax residents is that UK tax is due on worldwide income, certain foreign athletes may be deemed ‘UK non-domiciled’, enabling them to potentially make a claim for what is known as the remittance basis in order to avoid their non-UK income being subject to UK tax, provided that they do not remit or enjoy this foreign income in the United Kingdom and do not intend to reside in the United Kingdom long term.
For those temporarily visiting the United Kingdom the position can be more complex. While foreign athletes entering the United Kingdom sporadically as part of their overseas employment will generally not be subject to UK taxation, athletes who compete or train in the United Kingdom for a large periods of the year are at risk of becoming UK tax resident for the purposes UK taxation, resulting in potential UK taxation of their worldwide income. Athletes not permanently residing in the United Kingdom will need to consider their travel schedules to and from the United Kingdom carefully and whether this could trigger UK tax residency and potential UK tax liabilities on their non-UK sourced income.
Even where foreign athletes have not triggered UK tax residency, income can be subject to UK tax where it is considered to derive from a ‘relevant activity’ in the United Kingdom. This includes participation in sporting events as well as endorsement, sponsorship and other promotional activities carried out as part of any sporting performance. Foreign athletes can therefore find themselves subject to UK taxation on part of their general sponsorship income in addition to any match fees or prize winnings from a tournament in the United Kingdom. Athletes have previously complained that competing in the United Kingdom can cost more in tax than the competition fees earned.
When a foreign athlete is subject to tax in two jurisdictions on the same income, he or she may be able to reduce any taxes payable in one of the jurisdictions by taking a Foreign Tax Credit for overseas taxes paid under the terms of a double tax treaty. At present, the UK government claims to have the largest network of treaties, covering around 120 countries.