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Kevin Keegan: Taking an unfair dismissal claim to a tribunal is pointless for high earners

The headlines regarding the compensation awarded to former football manager and now TV pundit Kevin Keegan caught the attention of many. What was perhaps not entirely clear from the headlines was that the case was considered not by an employment tribunal, but by the Premier League managers' arbitration tribunal, a creature unique to football.

In some ways, the case brought by Kevin Keegan against Newcastle United Football Club was run-of-the-mill constructive dismissal. A senior manager is employed, but someone else is then recruited above him, who he might reasonably regard as less experienced and knowledgeable in the business. The new employee starts calling the shots and tells our senior manager that, although no one really knows what the aptitude of a particular potential recruit is, he is to be taken on for 'commercial reasons'.
The senior manager objects, arguing it should be up to him who he recruits and that he knows nothing about the suggested recruit. He is then told to watch clips on YouTube, to satisfy himself of the appropriateness of the recruitment. Disagreements then ensue as to who should have the final say in the recruitment. After being told the person will be recruited, whether he likes it or not, the senior manager resigns in response to this undermining of his position.
So far, so unremarkable. What is remarkable, however, is that the senior manager was Kevin Keegan, or the 'messiah' as he is often called in Newcastle. In addition, he was being paid £3 million a year to carry out his duties. The new employee was Dennis Wise who used to play for Keegan when he was manager of the English national football team. The possible South American recruit was an unknown quantity who was going to cost £1 million. All of this seemed to take place against the backdrop of allegations that Keegan was being prevented from signing the players he had identified.
Equally remarkably, Keegan could not have brought a claim for constructive dismissal in the employment tribunal, as he had less than a year's service. Even if he had been able to bring such a claim, the compensation awarded would have been limited to a small fraction of his losses. The case, therefore, demonstrates that the limits for compensation for unfair dismissal make it pointless for high earners to pursue claims in the employment tribunal.
Keegan could alternatively have brought a breach of contract claim in the ordinary courts in England. But the advantage of pursuing the route he did - an arbitration panel made up of two senior lawyers and a non-lawyer with a footballing background - was that the panel could bring not just legal knowledge, but practical knowledge of the footballing world to its deliberations.

This tribunal awarded Keegan £2 million - the amount provided for by his contract in the event of termination, effectively a liquidated damages clause.  He may also be awarded further sums, depending on further arguments about interest and other matters.
In addition, Keegan had tried to argue that the liquidated damages clause was an unfair term, as it did not accurately reflect his likely loss and was, in fact, a penalty clause. He also contended he was unlikely to get another job, given the events at Newcastle. The tribunal, however, found its decision was likely to repair any damage done to Keegan's reputation and that the contractual provisions were reasonable. Keegan appeared happy with the outcome, while the club appears to have made no official statement.
So, in the end.... a game of two halves.
Amanda Jones is a partner in the employment pensions and benefits team at law firm Maclay Murray & Spens