Transferring a football club and its players falls within the Labour Relations Act
A football club is an employer and the players are employees, so players’ contracts remain intact if it is sold
Professional football players and coaches in the Premier Soccer League (PSL) or GladAfrica Championship (GAC) have reason to cry foul if their clubs are sold and they are sidelined because the new owners cannot afford their salaries.
They are employees, and unless they gave their prior consent to being left behind or having their salaries cut, the new club owners could find themselves on the wrong side of the law — specifically section 197 of the Labour Relations Act (LRA).
What’s more, the fact that a sale may have the approval of the National Soccer League (NSL) does not make a transaction any more lawful if players, coaches or other employees have been unilaterally excluded.
PSL status is a coveted asset and the sale of football club statuses, as they are known, has become common in SA. The most recent reported transaction was the sale in July 2020 of Bidvest Wits FC, the oldest PSL club in SA, to GAC side Tshakhuma Tsha Madzivhandila.
Considering the financial predicament of professional football, this will probably not be the last time a PSL club is up for sale. It is important, then, for both existing and prospective owners to understand their legal obligations as employers.
There are two key issues to keep in mind. One is that football clubs are employers and football players, coaches and others are employees. The second is whether the sale of a club is a “transfer” under section 197 of the LRA. The test is simple: if the club will remain the same, except for being in the hands of another employer and a potential name change, and will continue to operate, then it is a transfer.
This means that, unless otherwise agreed, the new employer automatically takes the place of the old employer, including the employment contracts of players, coaches and other employees.
Furthermore, the new employer is required to employ the transferred employees on terms and conditions that are no less favourable on the whole than the terms and conditions on which they were employed by the old employer before the date of transfer.
It is also a requirement that the old and new employer consult and enter into an agreement with the affected employees and/or their trade union about the consequences of the sale.
These are legally binding requirements that have already been tested in the sport of football.
The 2015 NSL Dispute Resolution Chamber arbitration in Dhlamini and Dynamos Football Club is a case in point. Here it was found that the sale of the status of Dynamos amounted to a sale of the business, and not only of the goodwill and right to compete in the PSL. As such, the employment contracts of the Dynamos players had to be transferred too and could not be excluded from the sale agreement without the players’ written consent.
A similar finding, also in 2015, was made in the arbitration between Sofiadelis & Another and Amazulu Football Club, where it was confirmed that the sale of a football club amounts to a transfer in terms of section 197 of the LRA.
Professional football players, coaches and other employees have been known to find themselves without jobs when the status of a football club is sold and the new employer contends it cannot afford some or all of the salaries paid by the old employer. This is unlawful and exposes both the new and old employers to the risk of litigation. Both the old and new employer remain jointly and severally liable in the first 12 months after a sale.
Anyone considering buying or selling a football club status would be well advised to keep the employment law implications in mind by doing proper due diligence, including a feasibility study of the players’ contracts and their salaries, and making sure that employees or their trade unions are consulted. Anything less could end up as an own goal.
• Dube is a senior associate at Bowmans.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.