The Potential sacking of Ole Gunnar Solskjaer - Damages vs Liquidated Damages

Ole Gunnar Solskjaer gambled on a new formation against Tottenham Hotspur on Saturday evening and he was rewarded with a 0-3 away win. This win briefly lifted the huge pressure on the Norwegian’s job security.

Many fans were calling for the Manchester United Manager’s head after the 0-5 drubbing they received at the hands of Mohamed Salah and Liverpool. Several media outlets were reporting that another poor performance could be the final nail in the coffin for Solskjaer.

If Manchester United do decide to dispense with the services of Ole Gunnar Solskjaer in the near future, what would happen from a legal perspective?

The Legal Effect

A manager’s contract will normally contain an express provision specifying the circumstances in which the club can terminate it immediately without awaiting the expiry of any fixed term, or of notice.?

Poor performance on the pitch isn't usually one of these circumstances, yet we see clubs frequently dismiss managers without the completion of their fixed term or requisite notice for this exact reason.

Steve Bruce would have also gone through this process as Newcastle's new owners recently dispensed of his services as manager in October 2021.

Damages

Using the example above, if Manchester United were to sack Ole Gunnar Solskjaer based on poor performance he would have a remedy for Damages. The starting point for these Damages is to take the manager’s contractual entitlement up to the earliest date when he could have been lawfully dismissed. Ole Gunnar Solskjaer’s contract at Manchester United runs until 2024 (without including his 1 year option).

For simplicity, let's say Manchester United sack Ole Gunnar Solskjaer on 1st January 2022. Solskjaer's claim for Damages would be his remaining contractual salary from the period, 1st January 2022 to the expiry date of his contract in 2024. I have left out bonuses as they are a little tricky to work into an example.

Liquidated Damages

In order to give themselves certainty as to the amount of compensation that might have to be paid out, clubs will look to include a provision for ‘Liquidated Damages’?

Liquidated Damages is a specified amount of money which is detailed in the manager’s employment contract which becomes payable in the event of early termination of a fixed term where there are no grounds for summary termination. Having a large amount of compensation paid out could disrupt the club's finances plus have an effect on the club’s compliance with UEFA’s Financial Fair Play rules (if this is even still a thing!).

Damages v Liquidated Damages

Shall we add some numbers (not real figures, of course) to illustrate the example:?

Under a contract with no Liquidated Damages provision. Ole Gunnar Solskjaer's weekly salary is ￡150,000. His contract ends on 1st January 2024. He is sacked on 1st January 2022. Solskjaer will claim Damages for his remaining salary which is ￡150,000 X 104 weeks (2 years) = ￡15.6 million

Compare this to a contract which includes a Liquidated Damages provision. Prior to signing this contract, Solskjaer agreed to a Liquidated Damages provision of ￡6 million to be paid in 4 yearly installments in the event of an early termination of his fixed term. Ole Gunnar Solskjaer weekly salary is ￡150,000. His contract ends on 1st January 2024. He is sacked on 1st January 2022. Solskjaer will receive ￡1.5 million per annum for the next 4 years.

You can see how the examples differ and favour either the manager or the club respectively.?

Nevertheless, a football manager’s contract of employment is no different to most. They share the same statutory rights as most other professions.?

Ole Gunnar Solskjaer hasn't left the fire just yet as he welcomes the English Champions and noisy neighbors, Manchester City to Old Trafford next Sunday. Should Manchester United sack Ole Gunnar Solskjaer for poor performance there is no doubt that he will receive compensation, the question is how much??

How much do you think Ole Gunnar Solskjaer Liquidated Damages provision is worth? Comment and let me know!