What is the current legal situation between a golf club and its head professional?

The National Golf Clubs Advisory Association (NGCAA) explores the legal situation between a golf club and its head professional during the Covid-19 lockdown.

During the shutdown period for golf clubs as a result of the coronavirus pandemic, many clubs are seeking advice as to how to approach existing contracts with their golf club professional (pro).

Some clubs will have the pro as a direct employee, in which case they may wish to furlough the pro and potentially claim 80 per cent of wages (subject to the cap) from government.

It is worthy of note that for the purposes of the furlough scheme, the ability for employers to claim money back from the government relates to anybody who is paid through PAYE, which means that it is a slightly wider than normal definition for ‘employee’ than we might see for other employment rights.

Working on the basis of the pro being self-employed, if the pro loses money as a result of the shutdown from coronavirus, then they may be able to claim money back directly from the government for lost income. That sits separately to the contractual relationship between the club and the pro – the claiming of lost income would be something that the pro resolves personally.

In terms of how things work between the club and the pro, it would be governed by the terms of the contract. Some contracts have a ‘force majeure’ clause in them which would allow the parties to walk away from the contract and to suspend it for a period of time. Those clauses are fairly rare in pro agreements, but they do exist so managers should check the wording of their contracts before making any decisions.

We have also taken counsel’s opinion in relation to potential frustration of the contract and that does not appear to be an option to allow clubs to get out of paying the pro, at least based upon the predicted three-month shutdown.

The shutdown is not likely to be a ‘gross misconduct’ event, which means that if the club wanted to terminate the contract, it would have to do so in accordance with the required notice under the contract. It is fairly commonplace for pro agreements to have a notice period of three months or 90 days, but if there is nothing specific, contracts such as these should be terminated upon reasonable notice, which would be likely to be three months in any event.

Golf clubs should also take care because some pro agreements have a further provision contained within them to provide for a ‘settlement payment’ to be made to the pro in circumstances where the contract is terminated for reasons other than gross misconduct. Typically, it will be a settlement payment of 10 per cent of the previous year’s gross turnover, in addition to the notice requirements mentioned above.

Given that the enforced shutdown is likely to last approximately three months, it may mean that the termination of the pro’s contract is unpalatable and unrealistic.

We are suggesting that clubs sit down and enter a negotiation with their pro about the possibility of taking reduced or no income during the shutdown period. If the parties are able to reach agreement, then that should resolve matters for the time being. It may leave the door open for the pro to be able to claim money back from the government as mentioned above.

It should also be mentioned that if the pro has his / her own employees, s/he may be able to furlough them and claim money back for their wages. Similarly, if the pro is trading as a limited company to provide services to the club and s/he is in fact an employee of that company, s/he may also be able to furlough him / herself and claim money back that way.

It is also sensible to point out that if a club were considering the termination of a pro’s contract, that there is always the possibility that the pro may be seen as an employee. This would be different to the definition mentioned above for furlough purposes, and relates to the test applied by employment tribunals to determine somebody’s status and, most importantly, usually to determine whether they are able to claim unfair dismissal.

If the pro has more than two years of continuous service and is an employee, they may be able to successfully claim unfair dismissal if matters are not handled correctly during a potential termination of the agreement. To defend a claim, a club would first of all have to have a genuine redundancy situation, which is very likely to be the case with the shutdown. We would advise clubs to follow a procedure which mirrors that of an employment redundancy process when handling matters with the pro if terminating the contract. It would not be sensible to use any terminology that indicates an employment relationship, in case that is seen as an admission of liability in relation to status, but we would suggest following the procedure for consultation. If any club is considering termination of the pro’s agreement, then we would suggest reviewing the redundancy section and template documents on our website and contacting NGCAA for further advice.

As we say above, though, the most realistic solution for clubs with pros is to sit down and have a sensible discussion from which the parties may be able to negotiate terms for the shutdown period.

This is the second article from the NGCAA on legal matters in relation to Covid-19. The first can be accessed here.

Alistair Smith, NGCAA CEO

For all matters of golf club law, particularly in relation to coronavirus-related matters, please contact office@ngcaa.co.uk or call 01886 812943