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Off the Pitch Battles

Off the Pitch Battles

Here is the second leg of our News Alert looking at recent disputes between football clubs and their senior employees which have been played out in Court.

You can view our first News Alert of the series Battles off the Pitch here.

Milanese v Leyton Orient Football Club Limited

Can an employer recover all remuneration paid to a senior employee following alleged breaches of fiduciary duties?

Fiduciary duties are additional duties that go beyond contractual obligations and in effect require an individual to place the interests of the business above his personal interests. Other than in established fiduciary relationships, for example between solicitor and client, these additional duties can be imposed in circumstances where individuals (usually very senior employees) have assumed responsibility over the interests, conduct or affairs of another. This topic was extensively discussed with regard to LLP members, LLPs and senior management in F&C Alternative Investments (Holdings) Limited v Barthelemy.

In a recent football case the issue of fiduciary duties of employees was explored: in Milanese v Leyton Orient Football Club Limited, the Club’s Director of Football, Mauro Milanese, was summarily dismissed (i.e. without notice or payment in lieu of notice) for gross misconduct. The High Court rejected Milanese’s claim that he had been wrongfully dismissed, and accepted he had committed gross misconduct justifying summary dismissal in one of the six instances alleged by the Club.

The Club counter-claimed that Milanese had breached fiduciary duties owed to them and that they were therefore entitled to recover all salary and benefits paid to him during his employment.

The Court held that Milanese’s employment contract did not impose any additional fiduciary duties on him (despite the fact that he had responsibilities over the Club’s spend on transfers).  The Court confirmed the position that (i) an employee does not automatically owe fiduciary duties to their employer and (ii) it is the employment contract which determines whether or not an employee owes such fiduciary duties and, if so, the nature and scope of them.

The Court also decided that even if Milanese had owed fiduciary duties, the Club would not be able to recover all the money paid to him during his employment as he was entitled to be remunerated in return for the work he had carried out for the Club.

Implications for employers

This case highlights the importance of ensuring that employment contracts are carefully drafted to reflect the employer’s intentions and the expectations of an employee’s role, including where the intention is that they should as far as possible owe the club fiduciary duties in the performance of their duties because they are assuming responsibility for management of the club’s assets, including its players (and related transfers of them), and its other key staff.  While the decision in the case is not necessarily surprising it is a good reminder of the importance of careful drafting!

David Fisher and Zeinab Harb specialise in employment and partnership law and have a particular interest in football club related employment issues.