Managers rights and changes to unfair dismissal law.

Can Clubs Still Pull The Trigger?

When results turn sour, football’s answer has traditionally been simple: sack the manager. From Roman Abramovich’s revolving door at Chelsea to the annual Premier League managerial merry-go-round, changing the person in the dugout is often viewed as the quickest route to recovery.

Football has built an entire culture around managerial turnover, with clubs regularly dismissing head coaches in pursuit of instant improvement. Indeed, a record-breaking nine clubs began the 2026/27 Premier League season with a new manager or head coach, albeit not all following a dismissal.

That culture is unlikely to disappear. But from 1 January 2027, clubs may need to think much more carefully before pulling the trigger.

The Employment Rights Act 2025 is expected to reshape the unfair dismissal landscape.

This will prove football is not immune to ordinary employment law: while it has often operated as though sporting realities exist separately from ordinary workplace rules, clubs are increasingly discovering that they are employers first and football institutions second.   

Dismissing a manager is therefore both a footballing decision and a legal risk assessment.

The Legal Changes

From 1 January 2027, the principal changes affecting unfair dismissal law will include:

• employees will usually acquire protection against unfair dismissal after six months of continuous employment, rather than two years;
• the time limit to make a claim will increase from three months less one day to six months less one day from the date of dismissal, subject to the statutory rules on ACAS Early Conciliation; and
• the monetary cap on the compensatory award will be removed.

These changes do not alter existing day-one rights, including protection from discrimination and dismissal for automatically unfair reasons.

The Qualifying Period

Historically, clubs have enjoyed a generous two-year window in which managerial appointments could be assessed before statutory unfair dismissal protections became relevant.

That window is about to shrink dramatically to six months of continuous employment.

Retrospectively, had these changes applied from the start of the 25/26 season, Graham Potter (West Ham), Nuno Espirito Santo (Nottingham Forest), Ruben Amorim (Manchester United), Enzo Maresca (Chelsea), Thomas Frank (Tottenham Hotspur), Arne Slot (Liverpool) and Rob Edwards (Wolverhampton Wanderers) could all have benefited from the reduced six-month qualifying period, whereas under the law at the time, they could not as they had not been the manager for two years.

Interestingly, it could also have applied to Enzo Maresca (Chelsea) despite the fact he resigned. A resignation may amount to constructive dismissal where the employee proves a repudiatory breach by the club, resigns in response to that breach, and does not affirm the contract.

However, whether the alleged interference in tactical, transfer or medical decisions would have crossed that threshold is speculative. Board involvement will not always amount to a breach of the implied term of mutual trust and confidence and must be proven on the facts.

The Limitation Period

Employees, including managers, players and club staff, will have six months less one day from the relevant act or effective date of their dismissal to pursue an unfair dismissal claim.

This longer period gives managers and players more time to obtain legal advice while simultaneously negotiating with new clubs. For clubs, it may extend the period of financial uncertainty; having dismissed a manager, they must be conscious of the threat of an unfair dismissal claim for double the amount of time they previously had to.

Consequently, clubs that now dismiss a manager in February, may have to be prepared to set aside money for a potential unfair dismissal claim to arise for as long as until August, which may impact their budget for the entire transfer window.

Compensation

The removal of the compensatory cap is likely to be the most eye-catching reform for clubs.

For dismissals falling under the present regime, the compensatory award is capped at the lower of 52 weeks’ gross pay or £118,223. From 1 January 2027 those two limits will be removed.

This season’s Premier League managers will all be earning between £2 million and £15 million per year. The consequences for clubs could be astronomical.

Take Unai Emery. Aston Villa pay him £8 million per year. He signed a five-year contract, which expires in June 2029. Should Villa sack him by the end of September, they could be liable, in the case of a proven unfair dismissal, for the remaining two years and nine months of his contract, totaling up to approximately £22 million.

If Arsenal unfairly dismiss Mikel Arteta this September, they could be liable for potentially up to £11.25 million for the remaining nine months of his contract (worth £15 million per year). If Brentford unfairly dismiss Keith Andrews, they could be liable for nearly £15 million for the remaining five years and nine months of his contract (worth £2.6 million per year).

These examples demonstrate the potential consequences of lengthy and high-salaried managerial contracts. An uncapped award could be substantial where a highly paid manager proves a lengthy period of loss. Even brief periods of unemployment could generate significant liability, highlighting how sacking a manager has the potential to cost a club millions, plus the new manager’s salary.

There is, however, an important qualification. An unfair dismissal award would not automatically equal the outstanding value of the fixed-term contract.

The tribunal will consider causation, the duty to mitigate by seeking alternative employment, prospects and timing of alternative work, earnings in replacement employment, and supporting evidence for salary, benefits, pension and any bonus or deferred remuneration.

Employment Law 4 v Contract Law 0

A big question remains. Why would a manager bother pursuing an unfair dismissal claim, thus potentially making themselves less appealing to future clubs, when they receive significant severance packages anyway?

For example, Jose Mourinho has accumulated around £100 million throughout his career just from his dismissals from Chelsea, Real Madrid, Manchester United and Tottenham Hotspur, without claiming unfair dismissal. Antonio Conte received a substantial £26.6 million payout after being sacked by Chelsea in 2018!

Contractual and statutory claims protect different interests and may overlap. The correct route depends on the wording of the contract, the reason and process for dismissal, the losses alleged, available forums and the litigation risks.

Yet employment law gives managers four advantages that are not generally available through contractual claims.

1. Contractual damages are usually limited to what the contract’s written terms explicitly say is owed, whereas a statutory unfair dismissal claim evaluates total losses suffered and attributable to the dismissal, and awards what is just and equitable under employment law. This means discretionary bonus clauses, such as promotion or title earnings, are more likely to be considered in an unfair dismissal claim, rather than just guaranteed pay.

• Except through ACAS conciliation or a valid settlement agreement, an employee cannot contract out of the right to claim unfair dismissal. Conversely, clubs often include ‘underperformance’ clauses in a manager’s contract, limiting their payout following a sacking, which helps them to comply with Financial Fair Play regulations. However, such liquidated damages clauses will not be relevant to an employment claim.

• Contractual damages are taxable as regular earnings, whereas unfair dismissal compensation is tax-free for the first £30,000. This is especially beneficial to lower-league managers who would receive smaller pay-outs.

To note: tax treatment depends on the nature of each element of a termination payment, and clubs and individuals should obtain specialist tax advice.

• Costs orders are less prevalent in employment law, meaning there is less risk of an unsuccessful claimant having to pay the other party’s legal costs, minimising the chance of accumulating an excessive legal bill. This gives sacked managers more leverage to force a better settlement, as even bringing a case would be costly to their employer and bring a risk of negative publicity.

Therefore, unfair dismissal compensation could exceed a contractual termination.

For example, if Aston Villa sack Unai Emery this September and his contract contains a 6 month ‘underperformance’ clause, he would be capped at £4 million compensation and would have to pay massive High Court legal fees, as well as risk paying the club’s legal fees if he loses any part of his argument.

Conversely, if Emery files an unfair dismissal claim to the Employment Tribunal and it takes him 10 months to find a new managerial job on an equivalent salary to what Aston Villa paid him, he could get up to £6.6 million in actual salary losses, as well as a hypothetical £500,000 discretionary bonus he was likely to, and historically usually, achieved, plus a hypothetical £50,000 in club pension contributions. This would give him a £7.15 million payout, with the first £30,000 being tax-free.

As such, by claiming unfair dismissal, he walks away with £3.15 million more than his contract said he was allowed to claim.

Equally, contractual damages may be more straightforward or valuable in another case. Double recovery is not permitted, and any settlement should identify clearly which contractual and statutory claims are being resolved.

Fair versus Unfair Dismissals

A manager who has lost every match for the last three months may appear an obvious candidate for dismissal. Football has always been an industry defined by impatience. Owners want immediate improvement, supporters demand instant success and league positions can affect millions of pounds in revenue. Yet employment tribunals tend to take a less emotional and more methodical approach; poor results do not automatically make a dismissal fair.

The statutory question is whether the club had a potentially fair reason and acted reasonably in treating that reason as sufficient for dismissal. The dismissal needs to be carried out reasonably, fairly and lawfully, both substantively and procedurally.

The five statutory ‘potentially fair’ reasons are:

• conduct;
• capability or qualifications;
• redundancy;
• a statutory restriction; or
• some other substantial reason.

Crucially, one of the above reasons will only be considered fair if the correct dismissal procedure is also followed.

Questions for Clubs

• Were expectations, authority and objectives clearly communicated?
• Were performance concerns supported by reliable evidence and properly documented?
• Was the manager told what improvement was required and given a reasonable opportunity to respond and improve?
• Were relevant contractual, disciplinary and capability procedures followed?
• Were alternatives to dismissal genuinely considered?
• Was the decision taken by an appropriate and impartial decision-maker?
• Was a reasonable appeal offered?
•  
• Football decisions are often made at speed. A relegation battle or prolonged run of defeats does not naturally lend itself to a lengthy performance-management process. But bypassing that process is becoming increasingly risky, particularly when an uncapped award may be available.

The Impact

Antonio Conte’s unfair dismissal claim against Chelsea is one of the very few successful cases previously brought by a football manager. However, he was only awarded £85,206 by the Employment Tribunal in relation to unfair dismissal – a drop in the ocean compared to his full multi-million-pound compensation package.

The employment law changes will now elevate the appeal of unfair dismissal claims for managers. They may be less willing to accept a reduced contractual settlement merely to avoid litigation if an unfair dismissal claim offers a realistic prospect of recovering their evidenced losses.

From a club’s perspective, the unfair dismissal law changes might lead to greater caution and proactiveness. As a result, managers may spend less time in the dug-out and more time in the boardroom, with directors eager to clearly outline their performance objectives.

Managerial contracts may also become shorter in length, to avoid costly compensation pay-outs. Contracts like Keith Andrews’ six-and-a-half year one may be booted away, with shorter contracts, like David Moyes’ two-and-a-half-year deal, being more favourable to clubs.

Yet shorter contracts are not always the answer. They may create recruitment and sporting disadvantages, while expiry or non-renewal of a fixed-term contract can still amount to a dismissal for employment law purposes.

Clubs should ensure they take legal advice before dismissal to review contract length, break clauses, notice provisions, objective performance measures, bonus drafting, set-off provisions and settlement mechanisms. Drafting alone cannot exclude statutory unfair dismissal rights, and an unduly short contract may create sporting and recruitment disadvantages. The decision is therefore commercial as well as legal.

Finally, the changes may also result in employment disputes between managers and their clubs becoming much more public than previously, which may be an attractive option for those who seek public vindication, and not just financial compensation.

Players Are Watching Too

The reforms do not stop at the technical area. Professional players are also commonly employed under high-value, fixed-term contracts.

Playing contracts contain clauses which require players to resolve contractual disputes through arbitration. This does not apply to statutory claims, such as unfair dismissal, but arbitration has traditionally been the favoured route for players. This is because it gave them access to uncapped damages, whereas unfair dismissal has been subject to the statutory compensation cap.

This meant the financial value of bringing an unfair dismissal claim, for a high-earning player, would be negligible; whilst the time and potential reputational cost of litigating in the public courts would make it an even less appealing option.

There has also been a recent trend of players waiting for their fixed-term contracts to expire and leaving on a ‘free’ transfer. As this negates the need to pay a multi-million-pound transfer fee for the player, the player can then secure a significantly higher wage packet from their new club.

Furthermore, the Premier League contract provides that, where a player’s fixed-term contract expires and they are not offered a new one on at least favourable terms, they will receive a maximum compensatory award of £236,446 if they do not make an unfair dismissal claim. This was twice the maximum compensatory award for unfair dismissal.

However, the ERA will render this clause unworkable and destroy its value by providing uncapped compensation for unfair dismissal, thus counteracting its use as an incentive for players not to litigate against clubs. Players may continue to run down their contracts, but so that they can claim unfair dismissal, on top of seeking a free transfer.

Conversely, this may prompt clubs to renew fixed-term contracts where they might not have before. It will be a consideration of weighing the cost of a successful unfair dismissal claim against continued wage payments.

Action to Take

Clubs should:

• ensure contracts clearly define roles, decision-making authority, performance expectations, notice rights and termination mechanisms clearly;
• consider settlement structures, while recognising that a valid waiver of statutory claims requires ACAS conciliation or a compliant settlement agreement and independent advice for the employee;
• manage probation and performance reviews actively and early;
• record concerns, objectives, support and review outcomes throughout the appointment;
• consider equality, whistleblowing and other day-one risks before taking action;
• check governing-body, league and arbitration rules alongside the employment contract;
• calculate limitation, qualifying service and potential loss carefully, including statutory notice, mitigation and possible reductions; and
• obtain employment and, where appropriate, tax advice before dismissal or settlement.

Proactive planning may be the difference between an orderly managerial transition and a costly employment dispute.

The Final Whistle

Managerial dismissals will remain a feature of professional football. Owners will continue to demand results. Supporters will continue to call for change. Clubs will continue to act when performances fall short.

The pressure to pull the trigger may remain as strong as ever. The legal consequences of doing so, however, are becoming far more significant. What may change is the way those decisions are made.

The ERA 2025 signals the biggest shake up of employment law this century. It increases the relevance of unfair dismissal law to short-serving and highly paid employees, and will be a game changer for managers, players and club staff alike, tipping the balance of power away from clubs. It will provide a much-needed safety net for employees facing unfair dismissal, whilst changing the way clubs approach contracts and disputes.

Football clubs can no longer assume that changing the manager is simply the cost of doing business. The clubs that adapt quickest to this new reality may gain an advantage not only in the boardroom, but ultimately on the pitch.

This article reflects the position anticipated from the Employment Rights Act 2025 and published implementation timetable as at 4 September 2026. It is intended for general information only and does not constitute legal or tax advice. Commencement and transitional provisions, current compensation limits, league rules and the terms of the relevant contract should be checked in each case. If your club, governing body or sporting organisation requires advice on employment matters, please contact Wollens’ Regulatory and Sports Law Department.

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.