Kevin Keegan has won his case for constructive dismissal against former employers Newcastle United, being awarded £2mn by the Premier League’s Manager’s Arbitration Tribunal. He left the club in September 2008 after falling out with them over the purchase of a player Ignacio Gonzalez (who?) against his wishes.
Two issues arise from the case. Firstly, although the BBC website report does not go into the technicalities of Keegan’s case I would guess that he claimed the acquisition of Gonzalez constituted a fundamental breach of the implied term of trust and confidence between employer and employee. After all, if the manager doesn’t choose the players who does (probably a good question to ask in respect of Chelsea and several other clubs from time to time come to think of it)? Secondly, Keegan claimed stigma damages – £16.5mn of them – on the basis that he would not obtain further employment in football until he retired at 65. More on this further down.
Constructive dismissal is a claim for breach of contract. It isn’t necessarily a claim for unfair dismissal, but it will be wrongful dismissal. Keegan was reportedly on a three year contract worth £3.5mn per annum and had approximately three years to run. It would be interesting to read the full report (if available, which I’m sure it won’t be) to find out what claims he put in and why he was awarded a fairly low figure, in relation to the potential size of the claim. The panel probably thought he could obtain alternative work elsewhere within the unexpired portion of his contract and would thus mitigate his loss. He was reportedly seeking £25mn as compensation for his losses until retirement at 65. It is further reported that his contract placed a ceiling of £2mn on the amount of compensation he might be awarded in the event the parties fell out. I can only assume that he pressed on with his claim for £25mn on the basis that the repudiatory breach of contract caused all terms in the contract, including the compensation ceiling, to fall away, leaving the field open to him for a bigger claim.
Most cases of constructive dismissal don’t involve anything like those numbers, but the legal principles are the same whether you are the manager of a football club or working in an ordinary office. To succeed with a claim an employee will need to prove that the employer repudiated a term or terms in the contract of employment in some way and that breach was so serious that it discharged the contract. The employee then has to accept the repudiation by resigning in response to it and this is where many claims go wrong because the employee either waits too long (and “affirms” the breach) or doesn’t make it clear that they are resigning as a response to that breach.
For most people constructive dismissal is a big step to take because it usually means leaving without any notice monies or compensation; they have to be argued or litigated over later on.
Stigma damages – is a fairly unusual type of claim and, no doubt, the Geordie hordes will be less than thrilled that their “Messiah” now feels he has been tarnished by his association with them. It is a species of claim that arose out of the BCCI litigation in the last decade when a Mr Malik, who had worked for them for several years claimed that he would find it hard to get another job within the Financial Services industry because BCCI was known to have been operating fraudulently. The Court of Appeal allowed Mr Malik to succeed with his because it said that there was an implied term in the contract of employment that the employer would not run a corrupt or dishonest business. Sam Wallace, a football writer in today’s The Independent gets very steamed up at Keegan’s “greedy” claim. Leaving aside the morality of the claim, or otherwise, I fail to see how Keegan ever hoped to succeed with the claim.
Always take legal advice before claiming constructive dismissal. If you need any advice on these issues please call me on 0207 464 8433 or email me at firstname.lastname@example.org