Training Compensation and Contract Termination in Portugal
The two major regulations governing the payment of solidarity mechanism and training compensation in Portuguese football are the collective labour agreement for professional football players (CCT)1, and the regulations of the Portuguese Football Federation on the status and transfer of players (PFF Transfer Regulations). The amount of training compensation that shall be due to the training club immediately following the signing of a first professional contract by a player is mandated by Article 28 of the CCT, as well as by Article 20 of the PFF Transfer Regulations.
The rules of the federation
Under article 20 of the PFF Transfer Regulations, training compensation is payable to all the club(s) involved in the training and development of the player:
• When the player signs his first professional contract.
• Each time the professional player transfers to another club up to the end of his 23rd birthday.
• When the professional is transferred between clubs or two different associations (whether during or t the end of his contract), before the end of his 23rd birthday.
Annex 4 of these regulations establishes a table similar to the one contained within the FIFA regulations for training compensation. Training compensation is not due when:
• the training club terminates the player's contract without just cause2;
• the player is transferred to a category 4 club;
• the professional re-acquires amateur status upon being transferred.
In accordance with Article 3 annex 4 of the PFF Transfer Regulations, the duty to pay training compensation lies with the club which registers the player as a professional for the first time. It must pay all the clubs which contributed to the training and development of the player from his 12th birthday.
Article 5 Annex 4 of the PFF Transfer Regulations mandates that the amount due to all previous clubs involved in the player's development is calculated on a pro rata basis by multiplying the number of years the player spent training from his 12th birthday to his 21st birthday. In case of subsequent transfers, the same is calculated on the basis of the training costs incurred by the new club multiplied by the number of years of training spent by the player at the former club. For players aged 12-15, the training costs are assessed on the basis of the training and education costs of category 4 clubs.
The CCT provisions
Annex 3 Chapter 2 of the CCT foresees the indemnification of all training clubs for the development and training of players in two situations:
• When the player signs his first sporting professional contract.
• Compensation in situations besides this.
Annex 3 Chapter 2, Article 33 of the CCT entitles all the clubs involved in the training and education of amateur players to indemnity (compensation) immediately following the signing, by players, of their first professional contract. The minimum conditions entitling the training club to receive such payments are set out in Annex 3 Chapter 2, Article 33.2 of the CCT, and are as following:
• The training club must have communicated in writing to the player, before 31 May of the year in which the player's training period is due to end, informing him of its desire to enter into a professional contract with him on the terms, conditions and minimum remunerations that have been fixed for players by the competition in which the club has been integrated.
• The training club must submit a copy of this letter of intention to contract the player to the Portuguese professional football league and the Sindicato dos Jogadores Profissionais de Futebol (SJPF) no later than 11 July of the following year. The SJPF is the Portuguese professional footballer's union.
• The player must not, as at the 31st of December of the year when his 'contract' with the amateur club has come to an end, have reached the age of 24 years.
These minimum conditions must correspond to the value of the remuneration due under the previous 'amateur contract'. To this value, 10% is added from the list of compensation maintained by the Portuguese professional football league.
This amount must always, if possible, be agreed in writing between the clubs and the said agreement must be registered at the offices of the Liga Portuguesa de Futebol Profissional (LPFP). Annex 3 Chapter 2, Article 32.3 of the CCT requires the compensation to be paid within 30 days following the registration of the said agreement.
Pursuant to article Annex 3 Chapter 2, Article 33.6 of the CCT, in cases where the training club has terminated the amateur's contract without just cause, it is not entitled to receive any training compensation from the player's new club as and when the player signs his first or subsequent professional contract(s) in future.
Pursuant to Annex 3 Chapter 2 article 33.4 of the CCT, the amount of training compensation due to the former club shall not be less than 20 times the amount of salaries received by the player under his new professional contract. In cases where the player has played for more than one club during his training period, this amount shall be distributed proportionately among all the clubs involved in his training, according to the number of seasons spent by the player with them.
The LFPF maintains an annual list containing the names and amount of compensation due to the training clubs of all the players listed therein. This list must be sent no later than 15 June each year by the LFPF to the SJPF and the PFF. Annex 3 Chapter 2, Article 36 of the CCT requires any club which signs professional contracts with any of the players listed therein to communicate in writing to the player's training club(s) and submit relevant documentation to the LFPF.
Both rules are more or less similar and are applied in parri passu, with each making up for the other in situations of doubt or in cases which are unclear.
This is provided for by the rules of the PFF on the status and transfer of players. They are similar to and modelled around the FIFA regulations for the status and transfer of players.
The buying club must deduct 5% of the transfer fee agreed between it and the selling club. It must then distribute this fee (5%) to all the clubs for which the player played between his 12th and 15th birthday. For the clubs which the player played for during his 16th-23rd birthday, the buying club must pay them 10% of the transfer fee and not 5%.
It is the duty of the buying club to pay the solidarity mechanism to the previous clubs. This amount (5%, or 10% where applicable) is distributed equally among all the clubs involved in the training and education of the player. Pursuant to Article 20 of the PFF's Statutes, solidarity mechanism payments are paid on each occasion the player transfers, but only before the expiry of his contract and not for transfers effected by players who are out of contract. No payment is due for players who transfer on 'Bosman' free transfers.
Annex 5 of the PFF's Statutes establishes a table similar to the one maintained by the FIFA regulations on the status and transfer of players clarifying the different percentages used for calculating the amount (5% or 10%) according to the ages during which the player spent at each club.
Unilateral termination of contract
The rules governing the compensation due in cases where contracts are terminated with just cause for gross misconduct are provided for by the PFF Transfer Regulations and the Collective Labour Agreement (CLA) between the LFPF and the SJPF published in chapter 5 of the Portuguese labour official gazette3. The PFF transfer regulations contain no specific provision with regard to calculation of compensation in cases of termination with just cause. This relevant provision (Article 14) only says that: 'a contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause'.
The calculation of compensation is foreseen in the CLA. The rules of the CLA provide, under Article 48.1, that in cases where it is the player who has terminated his contract with just cause as a result of the club's gross misconduct, the player will be entitled to compensation equivalent to the amount he would have received had the contract been performed to its end. If the player signs a new contract, the amount that he will receive as from the new contract, and from the new season, should be deducted from the amount which he was allowed to receive from the original contract.
Pursuant to Article 48.2 of the CLA, the compensation only includes the basic remuneration and the eventual bonus due under the season in which the contract was terminated. This is without prejudice to the player's right to sue in civil courts for more compensation in case the damages he has suffered are greater than the amount he would have received under the contract, as provided for under article 48.3 of the CLA.
Under article 51.1 of the CLA, in cases where it is the club which has terminated the contract with just cause as a result of the player's gross misconduct, the club will be entitled to compensation for the damages suffered. In case the club benefits from the said termination (because it did not replace the player or it gets a new player with a lower monthly salary) the financial benefits received there from will be deducted from the damages suffered.
Felix MajaniConsultantCRA - Coelho Ribeiro e Associados, SCARL, Lisbonfelix.firstname.lastname@example.org
This article was originally published on Coelho Ribeiro e Associados' website, here.
1. Published in the Boletim Do Trabalho e Emprego (the Portuguese labour official
gazette) 1st serie number 33 of 8 September 1999.
2. Annex 4, Article 2(ii) of the PFF Transfer Regulations.
3. Ibid. footnote 1.