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ARTIKELSAMLING 2008

The new Italian Collective

Bargaining Agreement

LUCA FERRARI

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On 4th October 2005, after several years of exhaustive negotiation, a new Collective Bargaining Agreement C'new CBR') for non-amateur football players was signed in Rome by and between the Italian Football Federation ("FIGC") and the Italian Professional Football League ("Lega Nazionale Professionisti" or "LNP"), an unincorporated association which represents Clubs in the Italian first and second divisions ("Serie R' and "Serie B"), and the Italian Players' Association (''Associazione Italiana Calciatori" or ''Ale'') which is recognized as the de facto sole and exclusive bargaining representative for the players. This new CBA, along with the Regulations for the Arbitral Court and all the Exhibits thereto, supersedes and replaces the previous CBA of1989.

The first CBA was signed in 1981, in the aftermath of the enactment of Law no.91 of 1981 which, for the first time, recognised employee status for those athletes paid more than the expenses they effectively incur in return for their sporting activities. In light of such a criterion, FIGC categorised those football players registered with football clubs belonging to the first, second and third divisions, or "Serle .N.', "Serie B" and "Serie C" respectively as "professional" or "non-amateur". This unprecedented enactment, Law no. 91 of 1981, further provides that the relationship between a club and a professional athlete shall be regulated by a written contract drafted in accordance with a Collective Bargaining Agreement ("eBR') to be stipulated by the Italian Football Federation ("FIGe"), players' associations (i.e, players trade unions) and clubs' associations (i.e. professional football leagues). The CBA therefore creates the necessary

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background with a comprehensive and detailed definition of the players' duties and rights.

We hereunder highlight the main modifications introduced by the new CBA.

Article 2 and 3 - Formalities

and depositing an individual contract

Contrary to the previous contract form and collective agreement, which could not be modified (1), the current model expressly provides (art. 3.5) for the faculty to add individually bargained provisions. In application of relevant labour statutes, such individual terms and conditions may not diminish the minimum compensation, protections and guarantees provided by the collective agreement in favour of the player. A specific form to add special terms and conditions is annexed to the collective agreement.

The CBA still requires that the contract is deposited with the League, which shall verify its validity and communicate any objections to the parties within 30 days, in the absence of which, the contract is deemed approved (art. 3.4). A contract may not be approved by the League because, for example, it is not drafted on the standard form or because the club is not entitled to register that player, which is a condition precedent to the effectiveness of the contract. This could occur if the player is a non-ED citizen and is not in possession of a work permit, or if the particular club is not entitled to register a non-El.I player (2). If the contract is not approved, the club is liable to a "fair indemnification" for the player. Such compensation may be agreed between the parties, but not; beforehand. It can only be defined once the contract has been rejected by the League. In the absence of an agreement on a fair indemnity, the arbitration court shall determine its amount according to the arbitration regulations annexed to the collective agreement.

Non-competition provisions applicable upon termination of the relationship as well as any pre-emption right or right to first refusal after termination remain, as they have always been, expressly forbidden.

Article 2.2 introduces the possibility of agreeing on an option to extend the duration of the contract, in favour of the club or the player, or both, within limits, some of which are express and some of which are implied. The option must be in writing; it must specify the duration of the extension and the (possible) new terms and conditions, there must be a monetary consideration in favour of

the party granting the option, and the combined duration of the original contract and its extension pursuant to the exercise of the option cannot exceed five years,

Articles 4 and 5 - Salary

Resolving an old interpretative dilemmathe new collective agreement specifies that, under art. 4.2, if the net or after-tax compensation expressed by the parties should prevail, the parties must clearly state so and quantify the amount, Otherwise, where remuneration is only expressed as an amount before tax (the pre-tax amount cannot be admitted), or when both amounts are expressed, before and after tax, without any specification of which one should prevail, the amount before tax shall be taken into account. This is of considerable consequence, as any erroneous calculation of the tax burden will have an impact on the net amount, which, in accordance with Italian tax law, the player receives with his pay cheque. Furthermore, should the tax burden increase during the course of the relationship, a greater-withholding would apply to the player's agreed gross salary and negatively affect the net amount. Of course, if the tax burden diminishes instead, the player's net salary will increase by a corresponding amount. By specifying the net amount as the one controlling figure, the player has the opportunity to avoid anyvolafility in his net salary.

One of the main novelties introduced by the new agreement concerns the opportunity to divide up the player's remuneration between a fixed (minimum guaranteed) and a variable amount. The variable part of the player's compensation can be linked to various factors, such as individual performance (number of matches played, goal scored and the like) or team results (ranking in the national championship, UEFA or FIFA competitions), The variable part of the compensation foreseen in the contract cannot exceed 50% of the fixed salary.

It is still possible, but limited to the fixed amount, to foresee different figures in relation to the level of the competitions for which the team is eligible during the contract term: Champions' League, Serie A, Serie B, Serie Cl and so forth. Thus, promotion or relegation during the validity of the contract may have a positive or negative impact on the Player's basic salary. However, in no event may the remuneration of the player fall below or be set below the minimum wage periodically defined by FIGC. The minimum yearly compensation is currently set at about Euro 27.000 gross, i.e. Euro 19.000 after tax.

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The contract still provides (art. 5.4) for a grace period in favour of the club with reference to payment of played salaries. The salary is due at the end of each month, presumably from the first day of the following month. However, only after a delay of more than one month from such due date does the club become liable to pay interest, at the current legal rate, and damages for late payment, albeit retroactively, from the first day the payment was due. Needless to say, this is one of the terms which players should try to amend when negotiating with the club, such as increasing the interest rate, and reserving the right to terminate the contract in case oflate payment, excluding the grace period.

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Articles 9 to 12 - Players' duties and rights

An express contractual obligation on the player to submit to anti-doping tests, blood and urine exams and preventive medical inspections in accordance with the anti-doping regulations of the Italian Olympic Committee (CONI) and the Football Federation (FIGC) was introduced by Art. 9.2. However, art. 9.3, in redundantly stating that failure by the parties to comply with the anti-doping provision included in the foregoing paragraph shall result in the application of the disciplinary sanctions foreseen by anti-doping regulations, leaves doubt as to whether such a violation constitutes a breach of the agreement and therefore results in a contractual liability. To fill the gap, this provision must be read in combination with art. 11.1, which states that players may be sanctioned with penalties listed therein in ascending order (caution, fine, reduction of compensation, exclusion from training sessions with the team and termination of contract) if in breach of contractual or federative Of statutory football regulations. These penalties can be reduced Of, to a certain extent, excluded with ad hoc individual provisions. The Application of sanctions--ts reserved to the arbitration panel pursuant to a petition by the club, in accordance with the arbitration rules annexed to the collective agreement, which are addressed below.

Traditionally one of the most frequent sources of dispute between players and clubs has been the exclusion of the player from training sessions With the team. This normally occurs as a consequence of gross misconduct of the player, but it has also been abused sometimes to put pressure on a player, in view of a renewal or, on the contrary, termination of the contract. Except for in exceptional circumstances, in order to limit abuse, a player may only be excluded on discipli-

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nary grounds from training with the team pursuant to a decision by the Arbitration Panel. Apart from disciplinary reasons, another typical justification for exclusion is an injury or illness. In the latter case, the player usually wants to resume training while the club believes he is still unable to exercise with the team. Here no arbitration proceedings are required: the club may be justified in excluding a player, as long as that player is sufficiently injured or sick. However, should the inability of the player last for more than 6 months, the club, under art. 19 of the old collective agreement and under art. 15.4 of the new one, can either reduce the player's wage by half during the period of invalidity or terminate the player's contract altogether. Such a circumstance promises fierce legal and medical battles to support opposing views on the player's health, once the six-month grace period is about to elapse and the club is eager to cut that particular footballer out. Needless to say, this is one of the collective provisions which a player should try to amend when negotiating his employment terms.

Article 13 - Delays in the payment

of players' salaries

Particular attention should be paid to the provisions regarding a club's delay in the payment of salaries or outright default, under art. 13. Such a delay justifies the termination of the contract by the player provided that the former adheres to a special procedure called "messa in mora". In accordance with such procedure, after a grace period of20 days from the date the salary is payable (as mentioned above, the monthly salary is due at the end of each month, and presumably available from the first day of the following month), the player shall notify the club and the LNP by registered mail and formally request the payment of his overdue salary. In the event the club does not comply with the player's request within the following 20 days, the player is entitled to sue the club before the Court of Arbitration at the LNP and to obtain the termination of his contract. In spite of the termination, the club will be liable to compensate the player for his entire salary in accordance with the terms of his contract until the moment the player will agree to a new contract with a new club. If, on the contrary, the club reacts on the formal request of payment and fulfils its duty before the 20 day term elapses, no consequences shall derive from the late payment.

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Article 21 - Arbitration clause

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Article 14 and 15 - Injuries and diseases

The inability or invalidity of a player subsequent to injury or disease is regulated under art. 14 and art. 15. In case of injury or disease, the club should nonetheless pay the player his salary and it should also provide him with adequate medical assistance, surgery and treatment. The Player may submit a written request in writing to undergo surgery or be cured at a medical centre of his choice, provided the cost of such treatment is not substantially higher than the typical cost for the kind of surgery or treatment required. However, as we have already anticipated above, should the player's inability to play last for more than 6 months, the club might ask the Court of Arbitration at the LNP to either reduce the player's wage by half during the further period of invalidity or terminate the player's contract altogether (art. 15.4). Notwithstanding the foregoing and irrespective of the period of time involved, if the player's inability is considered irreversible, the club has the right to immediately terminate the contract (art. 15.6).

All players registered in Italy, apart from the health care and medical assistance provided by the National Sanitary System and the Club, are insured for a "basic" insurance cover. In addition to such basic insurance cover, for Euro 77,469.00, the professional player benefits from complementary ip'surance cover that must be granted by the Club pursuant to art. 8 of the Law 81/91 and art. 16 of the Collective Agreement, for Euro 206,582.76 (Serie A and B) or Euro 103,291.00 (Serie Cl and C2). The basic and complementary policies cover, for the foregoing maximum amounts, death and permanent or partial disability as a consequence of injury or disease, independent of the cause or activity which caused it during the validity of the playing contract.

The new CBA confirms that, in accordance with art. 4 of Law 91 of 1981, any single individual contract shall embody a clause providing that all disputes between players and clubs involving the interpretation, compliance and termination of the playing contract are subject to the exclusive jurisdiction and sale venue of the Court of Arbitration ofLNP (art. 21.1).

Furthermore, the new CBA mandates that the parties shall have no objections whatsoever to the competence and the decisions passed by the Court of

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Arbitration ofLNP (art. 21.2). Here, the new CBA simply replicates the rules which were already embodied in the prior CBA.

Not surprisingly, the new CBA has failed to find a satisfactory solution to the duality between ordinary labour courts and sporting arbitral courts. The legitimacy of such double track is expressly confirmed by art. 3 of Law 280 of2003 of Sports Justice, which provides that, in spite of the fact that a player might effectively commit himself to an arbitral court, it should always be possible for him to seek redress before a ordinary civil court for employment-related disputes. There were indeed several decisions passed by Italian judges, even before Law 280 of 2003, confirming that an employee has an irrevocable right granted by the Italian Constitution to seek redress before an ordinary civil court for employment-related disputes, regardless of any commitment he may have to his employer. This jurisprudence was based on art. 806 of the Italian Code of Civil Procedure.

Law Decree no. 40 of 2nd February 2006 modified art. 806 of the Code of Civil Procedure, finally allowing employment disputes (including players-clubs disputes) to be reserved to arbitration courts, wherever such possibility is expressly foreseen by the Law or the CBA.

In the case of football contracts both the Law (91/1981) and the CBA provide this option.

As a consequence, all contracts entered into after 2nd March 2006, which include an exclusive arbitration provision, effectively foreclose access of the player to an ordinary labour court.

The effectiveness of the new CBA

On 4th October 2005 the new CBA was duly executed. However, its entry into force is disputable due to the ambiguity of the specific terms provided therein.

Under Article 23, the new CBA states that the agreement is valid retroactively from I" July 2005. However, Article 24 of the new CBA partially reduces such retroactive effects and clarifies that employment agreements and related contracts concluded before the date, of execution of the new CBA (i.e. 4th October 2005) are valid and enforceable until their previously agreed expiry date, notwithstanding the use of different standard forms. However, such employment agreements are now regulated by the terms and conditions ot the new CBA.

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Indeed, as a general rule of Italian labour law, upon the entry into force of a new collective agreement all pending labour relationships, albeit initiated under the prior collective regulations, are deemed to be submitted to the new ones and the relevant contracts should be interpreted and applied accordingly. However, the players' association has provided its interpretation of Articles 23 and 24 of the new CBA, suggesting that events occurring after 4th October 2005 should be governed by the new CBA, while previous occurrences should be ruled by the old CBA, irrespective of the time the dispute was submitted to the Arbitral Court of the Italian professional football League. This approach appears to be reasonable: there is no doubt that a dispute arising from facts which took place before 4th October 2005 should only be resolved in compliance with the rules existing at that time, i.e, under the old CBA.

With regard to the expiry of the new CBA, Article 23 sets the expiry date at 30th June 2006. Unlike prior collective agreements, the new CBA expressly excludes any validity beyond the date of its expiry. In the past, in accordance with a well established rule of Italian law, collective agreements maintained effectiveness and validity (the so called "prorogatio") until a new agreement was negotiated and concluded. Probably, the signatories of the new CBA intended to avoid abuse of the "pro rogatio", as this happened with the old CBA, whose validity was extended for several seasons after its expiration. However, in light of the extensive negotiations required when collective regulations are revised, it appeared unlikely that the parties would succeed in executing a new agreement before 30thJune 2006. In fact, in spite of the provisions of Article 23, the validity and effectiveness of the new CBA was extended by agreen:ent of the collective parties until 30th June 2007 and again until 30th June 2008. These extensions by agreement will be granted season after season, until a new CBA will be negotiated.

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NOTER

1. For many years, under the old contract, the League would reject any supplementary provisions thus making it impossible for the parties to validly personalize the contract; only recently has the trend changed allowing separate, contextual and specific individual terms to compliment or substitute the standard terms

2. According to FIGC Regulations, during the same sporting season each club in the Italian Serie 'M is only entitled to register one non-Ell player from abroad, provided that the same club transfers a non-El,' player to a foreign club. The FIGC Regulation is clearly aimed at preventing the increase of the number of non-au players in the Italian championships. Clubs belonging to lower dlvlsions are indeed not entitled to register new non-Ell players from abroad.

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