Labour Law Issues in Sport: Employee or Independent Contractor?

9th February, 2024 - 6:09 am Categories: labour Law News & Updates Sports Law 0 Comments

INTRODUCTION

Professional sports players, as well as club executives and coaching teams, fall within the definition of employees, and as such, are subject to both the common law and standard rules of employment law. In principle, all forms of employees, including elite athletes, ought to be subject to the norms which have been set under the labour laws. However, there are opposing factions to this idea who are of the opinion that sports persons shall be afforded exclusive treatment owing to the nature of sporting activities. The idea that professional sportsmen should get special consideration under the labour laws was rejected by the US Supreme Court in Brown v. Pro Football. One of the union’s most compelling arguments in this lawsuit focused on how professional players are treated. The union argued that regardless of the legislation governing workers in general, pro sportsmen should always be given special consideration due to the particular environment in which they operate. We can comprehend how professional sports might well be unique in terms of, say, attention, enthusiasm, or concerns, the court said in response to this argument. However, they were unsure as to how they differ in terms of the antitrust exemption under labour law. The court ruled that it would be peculiar to provide professional athletes an edge that, for example, a transportation worker or coal miner could not have.

LABOUR LAW IN SPORTS INDUSTRY: GLOBAL PERSPECTIVE

It is neither a recent occurrence nor a problem that is unique to the Indian setting that there is friction with sportspeople on the one side and the officials on the other. Due to the labour laws in the foreign setting, club owners and administrators possessed the right to determine a person’s career. This authority often derives from the pyramidal organisational structure that sports federations typically employ. The international sports federation occupies the peak of the pyramid, accompanied by the national sports association, the local sports federation, and finally the teams at the bottom. In general, a player is not allowed to compete without the approval of national or international governing bodies. Through the creation of unions and alliances, endeavours were finally made to enhance the sportspeople’s negotiating stand as a result of this struggle. Football player unionisation efforts began in the UK in 1898 and were strengthened in the 1960s, while unions were established in the US in the 1960s. One might make a compelling case that the power dynamic has shifted in favour of athletes at this time. Furthermore, for athletes competing in professional sports, collective bargaining agreements have been the standard. Regarding the “employee” status of athletes, the Court of Appeals ruled in Walker v. Crystal Palace Football Club Ltd. that perhaps the claim that a particular athlete’s abilities put them outside the supervision of the institutions that hired them was considered unpersuasive. In this case, the court ruled that certain elements must be taken into account in order to formulate an employee relation. The concept of “mutuality of obligations” is one of these elements. According to the ruling in Singh v. National Review Board, an individual should have reciprocal responsibilities, in which each contractual party accepts responsibility towards the other, in order to qualify as an “employee.” Conclusively, such progressive judgments in other common law jurisdictions have helped shape the Indian perspective with respect to the relationship between a sportsperson and the governing authorities/clubs. Furthermore, professional athletes, trainers, and executives are not always bound by employment agreements. It’s possible that they are “contractors” with a “contract for service.” A person carrying a service agreement as opposed to an employment contract includes important differences. This difference has been highlighted in the following chapter.

EMPLOYEE OR INDEPENDENT CONTRACTOR? THE POWER BALANCE BETWEEN SPORTSPERSONS AND ADMINISTRATORS

It is crucial to remember that relying upon whether an individual is employed as a worker or a contractor, employers have distinct responsibilities. Employers in particular are responsible for any wrongdoings and violations committed by their workers. Additionally, companies are required to provide workers’ compensation insurance to cover accidents that happen while employees are doing their jobs or participating in sports for the company. So are sporting athletes to be considered as workmen as defined under Indian statutes or not is the question that had long remained unanswered. Since workers enjoy greater protection under the law, the main issue is whether to classify athletes as “employees” under the relevant labour laws. It may be challenging to determine whether athletes are acting in the capacity of “employees” or “independent contractors.” The reality that all interactions in the sports sector are controlled by contracts makes this situation exacerbated. Furthermore, compared to the player, these authorities typically have more bargaining leverage given such contracts. In this context, it is important to comprehend whether the application of labour law to sports may be a useful instrument for reducing the disparity in authority between the many stakeholders in the athletic sector. First off, sports stars are vulnerable to reprimand from a plethora of sources, as opposed to ordinary employees who are often subject to disciplinary action by the employer. For instance, the baseball regulations specifically acknowledge that a player could be subjected to sanctions for due reason by the organization (his employer), the league, and the Commissioner. Since elite athletes have divergent interests at work, there are approximately minimum three distinct causes of punitive proceedings. As a result, in order to determine the relation between a player and his organization some tests have been developed which have been discussed below.

• Test of Direction and Control: The direction and control test, which is mostly used to assess labor relations, focuses on how much direction and control the senior has over the subordinate. It seeks to ascertain whether the professional interaction between the employer and the employee is one of master and servant. It also seeks to ascertain if the employer has any influence over the type of work performed and the way the individual performs their job. When an individual receives instructions regarding how to complete a task in addition to what they must do, this is referred to as having control over them.
• The Organisation Test: The establishment of employer-employee connections is made possible by a person’s compliance with the employer’s instructions in respect to the essential services provided by the organisation. It is important to assess if the given services are essential, fundamental, and required for the organisation or are only extra and coincidental.
• Integrity Test: In this assessment, it is decided if a person is integrated into the employer’s organisation or if they have similar employment preferences at other businesses. The second aspect to consider is whether the person is compensated by their main employer or a subcontractor. They will be considered an employee if they answer “yes” to both of these statements.
• Economic Reality Test: This evaluation is intended to assess how economically dependent an individual is on the organisation.

INDIAN POSITION

In the Indian context, the growth and commercialization of sport has been complicated and dispersed, creating several difficulties, some of which are connected to employment laws, which is covered hereunder. Since, there are several organisations that regulate sports and athletes as a result, there are many interests involved. The Indian Olympic Committee and the National Sports Federations are at the national level compared to the state and district federations, which are located at the lower ranks along with a number of other players—including the Ministry of Youth Affairs and Sports and the Sports Authority of India who play an important part in the sector. In the middle of this intricacy, it’s critical to comprehend the athletes’ or sports people’s relationships with these organisations and other essential participants from a labour law perspective. While the power disparity between athletes and administrators has historically persisted on a global scale, it is crucial to note that, over time, steps have been taken to completely eradicate this disparity and bring athletes to parity with their employers in terms of negotiating power, primarily through “collective bargaining agreements.” Thus, in accordance with the Act’s regulations, Indian athletes also have the ability to form unions and associations; nevertheless, this is only the case for athletes who pass the interpretive assessments mentioned in the previous section; the Hon’ble Supreme Court established a link between this privilege and the classification of workers as employees in the case of Tirumala Tirupati Devasthanam v. Commissioner of Labour. Despite this, the liberty to organise unions in India is not accompanied by the ability to engage in “collective bargaining,” which has been proven to be an effective tool in correcting inequalities. In this regard, it is important to keep in mind that a Club must be regarded as an “industry” under Indian labour laws in order for an industrial dispute against the Club to be filed. The Bombay High Court examined whether the Respondent Club complied with the Industrial Disputes Act, 1947’s definition of an “industry” in Ratilal B. Ravji v. Tata Sports Club & Others. The “dominant nature test” was used as a basis by the court. Further, it decided that the Club would in fact fit the description of “industry,” making pertinent legislation applicable to it because it operated under its own policies and guidelines and had its own goals and objectives.

CONCLUSION

Despite the fact that intersection of labour law and sports may very well be complicated, it is necessary to keep an equilibrium between the influence of different industry participants, as is seen from the study above. I believe that India’s inadequate and restrictive labour regulations as well as the absence of sports legislation are to blame for the current problem. In cases of non-compliance with employment regulations, officials like SAI and NSF must be issued clear directives and be subjected to severe punitive measures. Additionally, the labour laws must be given a more expansive judicial interpretation in order to involve sports stakeholders, particularly the athletes, within their purview. If the above-mentioned measures are not incorporated, sporting figures shall be rendered helpless in cases of conflict with the employers and authorities having substantial control regarding terms of employment, therefore inculcating a demotivating attitude amongst potential athletes. The long existing ambiguity present in the industry has to be attended to immediately, keeping in mind the fact that it is an extremely potent industry, and it is long due for this problem to be addressed and resolved for progressive outcomes.

Author: Yash Dawda, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

BIBLIOGRAPHIES AND REFERENCES

• “Contemporary Labour Law Issues in the Indian Sports Industry – a Comparative Study.” Sports Law and Policy Review Reporter, July 17, 2022. https://sportslawandpolicyreviewreporter.com/2022/07/17/contemporary-labour-law-issues-in-the-indian-sports-industry-a-comparative-study/.
• “Employment Contracts and Sports People.” Law and Legal Principles: Employment Contracts and Sports People. Accessed September 22, 2022. http://www.leoisaac.com/law/law031.htm.
• Gupta, Aman. “The Power Balance between Sportspersons and Administrators.” Indian Sports Home – Latest News, Results, Olympics Stories, September 3, 2018. https://thebridge.in/law-in-sports/the-power-balance-between-sportspersons-and-administrators/.
• US Legal, Inc. “Find a Legal Form in Minutes.” Sports Law. Accessed September 22, 2022. https://sportslaw.uslegal.com/antitrust-and-labor-law-issues-in-sports/
• “What If Sport and Labour Law Have Become Interlocked?” Accessed September 23, 2022. https://www.ercprague2017.cz/wp-content/uploads/2017/02/Hendrickx_What-if-sport-and-labour-law-have-become-interlocked.pdf.
• Welch, Roger, “Employment Law in Sport”, University of Portsmouth, https://www.researchgate.net/publication/320555659_EMPLOYMENT_LAW_IN_SPORT
• Manfred, Robert, “Labor Law and the Sports Industry”, Hofstra Labor and Employment Law Journal, Vol. 17, Issu. 1 [1999]

CASE LAWS

• Brown v. Pro Football, Inc. 518 U.S. 231 (1996).
• Crystal Palace FC Ltd v Dowie [2007] IRLR 682, HC
• Harbhajan Singh v. Minister of Employment and Immigration, [1985] 1 S.C.R. 177
• Tirumala Tirupati Devasthanam v. Commissioner of Labour, (1996) IIILLJ 362 SC
• The Industrial Disputes Act, 1947, § 2(j), ACT NO. 14 OF 1947 1 (11th March, 1947)
• Ratilal B. Ravji v. Tata Sports Club & Others, 1998 (1) BomCR 417