The use of the ‘Law of 78’
During the Belgian transfer periods, the media regularly refers to the law of 24 February 1978 regarding the employment contract for paid sportspeople (hereinafter: law of 78). Well-known football players who used the law of 78 include Steven Defour, Andres Mendoza, Davy De Beule, Koen Casteels and recently Junior Malanda.
This law regulates a number of specific sports-related issues that deviate from the ordinary Employment Contracts Act. This law provides, among other things, for a special dismissal scheme for paid athletes. If a club does not want to cooperate with the transfer of a player to another club, the player sometimes threatens to unilaterally terminate his employment contract on the basis of this law. In return, the player must pay a cancellation fee.
Scope of application of the “Law of 78”
The Law of 78 applies to paid athletes, provided that they receive a certain minimum wage annually. This minimum wage is determined by Royal Decree and amounts to 10,612 euros for the years 2019-2020. In addition, the scope has been expanded to include trainers and referees.
A paid sportsperson is defined as a person who undertakes to prepare for or participate in a sporting competition or exhibition under the authority of another person. A well-known example of a non-footballer who used the Law of 78 is the cyclist Frank Vandenbroucke to force his transfer to Mapei in 1994.
The dismissal scheme in the “Law of 78”
The focus of the law concerns the possibility of terminating the employment contract between the employer and the paid sportsperson. If one of the parties terminates the employment contract before the end of the term, without giving an urgent reason, the injured party is entitled to termination compensation. This is equal to the wages owed for the remaining term of the employment contract.
However, the legislator has set an upper limit based on the gross annual salary of the paid sportsperson. After all, a termination compensation may not amount to more than double the amounts determined in the Royal Decree of 13 July 2004.
An illustration
Player X signs an employment contract for a period of five years with club Y. After six months, player Player
The termination compensation owed by player However, in accordance with the Royal Decree of 13 July 2004, the severance payment amounts to a maximum of two times 18 months’ salary. In other words, the termination compensation amounts to EUR 390,000 (36 times EUR 10,833.33).