The cost of disagreement? Special comment article by Alan Jones

Alan Jones, a partner at Averta Employment Lawyers, comments on the recent resignation of Fabio Capello as England Manager, its parallels in UK industry and how the law deals with such events.

It is not often the decisions made by a manager of the England football team raise some interesting legal questions, but Fabio Capello’s recent decision to resign has managed to do so. From the little we know about the matter, it seems that his decision was voluntary, although the FA says they did not try and persuade Mr Capello to change his mind. So what are his reasons and how does it fit into the legal context?

Again, without too much hard fact, the implication is that Mr Capello objected to the decision made by the FA that John Terry should not be captain of the England football team at Euro 2012. It is not clear whether or not Mr Capello was consulted before this decision, but it is quite clear that he disagreed with it. He, perhaps understandably, appears to have taken the view that John Terry is “innocent until proved guilty”, whilst the FA have taken the equally understandable perspective that the football team can do without the distraction of a potential trial on alleged racist behaviour. Both arguments are reasonable, so where does that leave Fabio Capello from a legal perspective?

It seems – and I must emphasise the facts are not that clear – that Mr Capello not only disagreed with the decision of the FA, but may well have felt that his position was undermined by their failure to include him in the decision making process. He may well have felt that that made his position untenable, that there was an element of “public humiliation” in not involving him, and that he had to leave. He may well have a claim for the unexpired period of his contract, and that could end up costing the FA a great deal of money.

In industry, this situation does not usually attract such interest, but it is by no means uncommon. If you liken the position of England Football Manager to that of chief executive of a company, his or her position might become impossible if there is a fundamental disagreement between them and the Board of Directors.

It is not unknown for a Chairman of a company to publicly disagree with the CEO, who may feel that he has no alternative but to leave. Furthermore, reaching decisions behind the CEO’s back, and without consultation with the CEO, would be seen as undermining his position within the company, and he or she would also have the right to resign and claim breach of contract. That said, it is unusual to find a CEO or MD of a company on a contract worth £6 million, so any claim for compensation arising from the constructive dismissal, is likely to be limited to a years’ pay or less, coupled with arguments between the parties about bonus, share options, incentive plans and other additional benefits.

Of course an everyday constructive dismissal lacks the excitement of the football world, and gives rise to far less speculation as to who will be the perfect replacement.

(That's Business would like to than Alan Jones and Averta for allowing us to carry this important expert comment on this subject.)