Dismissal for breaches of implied terms in an employment contract

The end of Cristiano Ronaldo’s (“Ronaldo”) second spell at Manchester United in November 2022 has raised some interesting points around employment law, implied terms in employment contracts and the risks faced by those in the public eye.

What has happened to Ronaldo

939 club appearances, 701 club goals and 1 controversial Piers Morgan interview. With over 500 million Instagram followers and lengthy careers at both Manchester United and Real Madrid, Ronaldo is arguably the most well-known footballer in the world. However, he now leaves the Qatar 2022 World Cup without a league team to return to.

On 16 and 17 November 2022 the “bombshell” interview by Piers Morgan aired. Whilst the relationship between Ronaldo and Manchester United was already fractured, this could be said to be the final nail in the coffin. Over the course of the 90-minute interview Ronaldo made multiple statements that could be considered to bring the reputation of the club into disrepute; for example, Ronaldo said:

• I don’t have respect for him [Erik Ten Hag] because he doesn’t show respect for me;
• The Glazers, they don’t care about the club;
• Manchester is a marketing club; and
• There was no evolution in the club… technology, infrastructure many things that I [Ronaldo] saw when I was 21 [are the same].

On 18 November 2022, Manchester published that it had initiated appropriate steps in response to Ronaldo’s interview and on 22 November 2022, Manchester United released a short but sweet statement thanking Ronaldo for his contribution to the club, but informing Manchester United and Ronaldo fans alike that his second spell with the club had come to an end by mutual agreement.

The consequences of his actions for his employment contract

Whilst this was of course a tense and stressful time for all of those concerned, Manchester United would have had to consider the practicalities and implications of Ronaldo’s actions in light of the express and implied terms in Ronaldo’s contract of employment.

As well as express terms in a contract, which vary between organisations and individuals, there are also terms which are implied into all employment contracts which include:

• The duty to obey instructions – an employee must carry out lawful and reasonable instructions given by the employer;
• The duty to avoid disruption – an employee is restricted from acting with the motive of disrupting the employer’s business;
• The obligation to be ready and willing to work – this speaks for itself, the employee must engage with their obligations in exchange for their remuneration;
• The duty of fidelity – employees must serve their employer with good faith and fidelity, this extends to the employee’s activities outside of working hours; and
• The duty to act with mutual trust and confidence – this provides that an employee and an employer must not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.

If serious enough, a breach of any of these terms, either alone or combined with other breaches, could potentially amount to gross misconduct and justify an employee’s dismissal.

Potential breaches of the implied terms in the employment contract and gross mic

Whilst we don’t know the precise details of what happened between Ronaldo and Manchester United, or the contents of his own personal contract, the interview in itself could be said to be a breach of the implied terms of “no disruption”, “fidelity” and “mutual trust and confidence” as it questions the reputation of Manchester United, is arguably a disruption to the business and is potentially damaging to the employee/employer relationship as Ronaldo engaged in what was likely to have been an unauthorised form of media interview.

Further, this season has seen a number of similar events that could question whether Ronaldo has already breached other terms of his contract with the club. For example, in Manchester United’s game against Tottenham Hotspur, Ronaldo refused to come on as a substitute towards the end of the game which could have breached the implied term to obey instructions.

Also, the Football Association (the “FA”) Regulatory Commission’s decision in the FA v Cristiano Ronaldo [2022] determined that Ronaldo was guilty of slapping a mobile telephone from a spectator’s hand. This not only led to a conditional caution by the police, but also a two-match suspension and a £50,000 fine. This again could amount to a breach of the implied terms of mutual trust and confidence and no disruption.

The disciplinary process to investigate allegations of gross misconduct

Breaches of implied terms need to be treated in the same way as any other potential misconduct issue. They should be investigated and a disciplinary hearing held to consider whether the allegations are upheld and what sanction should be given. If the allegations are considered serious enough to amount to gross misconduct then dismissal may be a reasonable sanction.

Employees with more than 2 years’ service have the right to bring an unfair dismissal claim if the correct process is not followed or the employer does not have a fair reason to dismiss. Find out more about the process of dismissals and disciplinaries.

Generally speaking, for employees with less than 2 years’ service, the options open to the employer are more generous, as the employee cannot challenge their dismissal by bringing an unfair dismissal claim. Having said this, we would still recommend that employers follow a process with employees with less than two years’ service, albeit perhaps a shorter one. However, the ability, or not, to bring an unfair dismissal claim is unlikely to have been a consideration for Manchester United in their treatment of Ronaldo. The statutory cap on an unfair dismissal compensatory award is £93,878, and given that Ronaldo’s weekly pay was speculated to be £385,000, his weekly wage dwarfs any potential liability for unfair dismissal.

Whilst many employers will prefer to make a decision at the end of a disciplinary hearing and then implement that decision; whether it be a warning, a final written warning or dismissal, often employers prefer to take a more commercial approach and enter into an agreement with the employee without making a final decision about any allegations.
Situations such as this are often addressed by having a “protected conversation” and reaching a without prejudice agreement between the parties to settle any claims and draw a line under their employment.

Although we cannot know for sure, based on the rumours that were circulating, this appears to be what may have occurred here. I.e. that both parties entered into a settlement agreement to allow for a clean break between the parties.

Clearly, Manchester United should and would have considered the bigger picture. Ronaldo not only performs well on the pitch but also has a huge global media profile. The club would have been engaged in many sponsorship relationships that may have required certain obligations from Ronaldo. They will now (depending on their agreement with Adidas) lose out on the revenue created from Ronaldo shirt sales, which within the first 10 days of him re-joining the club amounted to £187 million.

Further, the termination of his contract could have certain implications on the recent news that the Glazers are looking to make an exit. The affiliation with the goodwill that the Ronaldo brand brings, would have potentially led to an inflated headline price for the deal. Now that Ronaldo has left the club in such a negative manner and unearthed certain (in his opinion) “home truths” about the club, the amount (although still substantial) that they may receive could be reduced.

Conclusion

Ronaldo’s situation serves as a useful reminder that implied terms in employment contracts are often seen by employers as just as important as the written terms and employers won’t hesitate to take action if they are concerned about the behaviour of employees.

We can never truly know what has gone on behind closed doors. Well unless we get another interview…

In the meantime, if Ronaldo is looking for a new club, I as a Saints fan am sure that we wouldn’t say no.

If you are an employee who has been dismissed, or an employer considering dismissing employees, get in touch with a member of our Employment team who can provide guidance to ensure that this is dealt with in a professional and amicable manner.