An open goal? Elite sports and the new unfair dismissal regime

The Employment Rights Act 2025 (“ERA 2025”), which became law just before Christmas, will make significant changes to the law of unfair dismissal (“UD”); including by reducing the period of service required before an employee is protected, and lifting the statutory cap on the amount of compensation that can be awarded where a successful claim is brought.

These changes will apply equally to all UK employees, but this article focuses specifically on the implications for men’s professional football, because the sheer size of the salaries available in that industry provide a particularly stark illustration of the effects of the new regime. However, many of the key risk factors identified, and strategies that could be adopted to mitigate them, will be equally relevant to other professional sports (and, of course, other industries).

What is the current law on unfair dismissal?

As the law currently stands, an employee can only bring a UD claim if they have two years’ continuous service with their employer at the date of their dismissal. They must bring the claim within 3 months of their dismissal.

In a UD claim, an ex-employee alleges that there was no fair reason for their dismissal by the employer (there are five potentially fair statutory reasons), and/or that the employer did not follow a fair procedure in dismissing them. An employee can also resign, claiming that they were forced to do so as a result of the employer’s fundamental breach of the employment contract (“constructive” UD).

If a claim is successful, an employment tribunal (“ET”) may award the employee compensation, which is made up of two elements:

(i) a “basic award”, calculated using a statutory formula based on the employee’s weekly pay (subject to a fixed statutory cap, currently £719), their length of service, and their age (in a similar way to a statutory redundancy payment); and

(ii) a “compensatory award”, which aims to compensate the employee for their financial loss arising as a result of the dismissal (for example, loss of earnings), and is also subject to a fixed statutory cap (currently the lesser of a year’s salary or £118,223).

UD claimants are under an ongoing duty to mitigate their losses (e.g. by actively trying to get another job), and therefore minimise the amount of compensation payable to them.

How will the law change?

Through the ERA 2025, the period of continuous service required to bring a UD claim will be significantly reduced: from two years to six months.

In addition, the period within which a claim must be brought in the ET, will be increased from three months to six months (from the date of dismissal).

Lastly, the statutory cap on compensation will be removed entirely.

It is anticipated that these changes will take effect from 1 January 2027. If so, this will mean that anyone employed on or after 1 June 2026 will be protected from UD with effect from 1 January 2027.

What does this mean for men’s professional football players?

The changes to the UD regime will apply equally across all professional sports, including both men’s and women’s professional football. However, as is noted above, this article focuses specifically on the implications for men’s professional football, because the sheer size of the salaries available provide a particularly stark illustration of the effects of the new regime.

UD claims will become vastly more valuable / expensive

In men’s professional football, employee players are frequently:

(i) very high earners;

(ii) on fixed term employment contracts (FTCs); and

(iii) hired and/or fired at pace, in high-pressure, dynamic scenarios.

This cocktail of features means that the changes to the UD regime may materially affect the architecture of performance management, dismissal processes, litigation risk and settlement dynamics for professional clubs.

Imagine Mr Wells, a record-breaking striker, joined the Premier League club, Queen Street FC on 1 January 2026. He signed a five-year FTC, under which he earns around £200,000 per week:

• Under the current law, Mr Wells could not bring a UD claim if he was unfairly dismissed before 1 January 2027 and, if he eventually did so and was successful, could only receive a maximum compensatory award of £118,223 (i.e. around 60% of one week’s gross wages).
• Once the new ERA 2025 changes are fully effective, Mr Wells could bring a claim in respect of any unfair dismissal (most likely) from 1 January 2027, and could potentially (subject to mitigation) receive a compensatory award which included the entire balance of his wages under the FTC, or £41.6 million.

Under the new UD regime, even though the duty to mitigate losses would remain, the sheer scale of salaries means that, if even a short period of unemployment is attributable to an unfair dismissal, this could still be a very large liability for the outgoing employer. Going back to the example of Mr Wells, if he was dismissed unfairly by Queen Street FC on 1 January 2027 and no other clubs were looking to recruit mid-season, so he did not find a new club until 31 July 2027, he could potentially claim against Queen Street FC for at least seven months’ lost wages, or £5.6 million.

At the other end of the financial spectrum are academy players. Individually, they represent a fraction of the wage liability of a player such as Mr Wells, but it is common for clubs to terminate the FTCs of large numbers of academy players early, many of whom will currently have contracts significantly longer than 6 months. Terminated academy players are also likely to struggle to find alternative employment out of season, which could increase the value of any UD claim they might bring.

It is also important to remember that a “dismissal” for the purposes of a UD claim is not limited to cutting employment short. At law, the non-renewal of an FTC at the natural expiry of its term is also a dismissal. In recent years, there has been a trend of top players waiting for their FTCs expire, to leave on a “free” or “Bosman” transfer to a new club. As the new club need not pay a transfer fee in these circumstances, the player can often secure a much higher wage packet. Following the ERA 2025 changes, it is conceivable that we could start seeing the converse: players (particularly older or injured players) waiting until the expiry of their FTC, and bringing a UD claim if they are not renewed.

Either way, clubs will need to have very robust, clear and fair processes in place for ending employment (even if an FTC with an expiry date), and be extremely clear about the statutory potentially fair reason on which they are relying (for example, capability).

There will be increased potential for litigation and/or more leverage shifting to employees

Historically, it has been rare for players to assert their statutory employment rights in litigation, but that does not mean that those rights do not apply. Football clubs have employment contracts and disciplinary, grievance and dismissal procedures in the same way as other employers do, they just work slightly differently in a football context.

For example, Premier League players are engaged on a standard collectively-bargained employment agreement (“PL Contract”). The PL Contract contains a specific arbitration clause, requiring players to resolve contractual disputes through arbitration. Players in the English Football League use a similar private mechanism: the Player-Related Dispute Commission. Although arbitration is limited to contractual claims (not statutory ones such as UD), arbitration (or private negotiated resolution) was conventionally more appealing to players than litigation. It gave them private access to uncapped liquidated damages, whereas UD damages were subject to the statutory cap. The latter meant the financial value of bringing a UD claim, for a high-earning player, would be negligible; in addition to which, the time and potential reputational cost of litigating in the public courts would make it an even less appealing option. There is also further incentive not to litigate embedded into the architecture of PL Contract. Clause 19 provides that, where a player’s FTC expires and they are not offered a new FTC on at least as favourable terms, they will receive a payment of a further month’s wages, up to a maximum value of twice the maximum compensatory award in a UD claim (currently £236,446). That payment is conditional, however, on the player not making any UD claim to the ET.

The ERA 2025 may dramatically alter this equation for players. By abolishing the statutory cap, the ERA 2025 not only renders clause 19 technically unworkable, but also destroys its value as an incentive for players not to litigate.

In reality, of course, many professional players will likely still prefer to avoid the reputational exposure of litigating over such huge sums with a former employer in a public forum (bearing in mind too that ET judgments are published online). The important point, however, is that clubs are likely to be even more wary than players of public litigation over these issues. Although we may see a spike in UD claims brought by players, it is much more likely that players will start using the more concrete and valuable threat of a UD claim to strengthen their hand in settlement negotiations with their employer. The ERA 2025 certainly hands players more leverage in these disputes and, as outlined above, highlights the importance to organisations of having robust, fair procedures in place.

What do the upcoming changes mean for football managers?

The significant impact described above applies equally – or perhaps even more so – in respect of top football managers.

The central importance of managers to the success of a club means that their employers are less likely to tolerate any perceived poor performance or relationship breakdown, and it is not uncommon for them to have their FTCs cut short for reasons other than “transfer” scenarios. Ange Postecoglou’s time at Nottingham Forest is one example. He was hired as the manager on a two year contract, but was sacked after just 39 days in the post, after his team failed to secure a win in any of the eight games played under his leadership. The reduction in the qualifying period of service required for protection from UD, from 2 years to 6 months, will therefore also be pertinent for managers.

Historically, managers, like players, have tended to arbitrate their employment disputes rather than litigate in court, including through the Premier League Managers’ Arbitration Tribunal (“PLMAT”). The PLMAT mechanism is, however, limited to contractual claims, not statutory ones. Even before the ERA 2025, UD claims were not as unusual for managers to bring as for players. An illustration of this came in the aftermath of Antonio Conte’s firing by Chelsea in July 2018. Mr Conte initiated arbitration through the PLMAT, which awarded him a multi-million pound sum from Chelsea, but he also brought – and won – a UD claim. However, he was only awarded a total of £85,206 in his UD claim: a drop in the ocean compared to his yearly salary.

The removal of the cap on UD compensation will make bringing an ET claim a much more attractive prospect to managers, from a financial perspective. It may also result in employment disputes between managers and their clubs becoming much more public than previously, which may be an attractive option for some, for example if they are seeking some form of public vindication as opposed to a purely financial outcome.

Clubs will consequently need to be extremely careful about why and how managers’ FTCs are terminated, particularly where the dismissal occurs for reasons other than a demonstrable (and attributable) downturn in team performance on the pitch, or a clear-cut breakdown in the working relationship. Having a fair reason, and following a fair and reasonable dismissal process, will become all the more important.

How can organisations prepare for these changes?

The ERA 2025 changes to the UD regime are significant for employers generally, but they may have a disproportionate effect on the level of potential financial liability that professional football clubs have for their employees.

Key here for organisations will be ensuring that there are carefully drafted, robust, contracts of employment in place, including reasonable probationary periods during which suitability for the role is proactively assessed. Just as crucial will be having a clear, robust and fair suite of performance management, conduct, sickness absence, and dismissal procedures. Organisations should take steps now to review and update applicable contracts and policies in advance of the changes; seeking legal advice as needed.

For advice on how clubs and players might prepare for the coming changes, and mitigate against any increased legal and financial risk, please do get in touch with Robert Turner or Pete Kerr-Davis.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further advice.