Contemporary Labour Law Issues in the Indian Sports Industry – A Comparative Study

[From the Editors’ Desk]

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Introduction

The development and commercialisation of sports has been complex and fragmented in the Indian context, which has posed several challenges in this area, some of which are related to labour law.

The need for labour law in sport is felt largely due to the existence of multiple entities that govern sports and sportspersons, and therefore the various interests at play. Broadly, these may include the interests of the club, for instance, whereby they would not want to pay a player who is not able to perform; and the interests of sporting bodies, who seek to preserve the integrity of the game, not to mention the individual interests of professional sportspersons.

The present article concerns with the contemporary labour law and employment related challenges in the Indian sports industry.

IDENTIFICATION OF THE PROBLEM

The organisational structure of Indian sports is shaped in a pyramid form and is hierarchal in nature, formed in a highly complex manner with the Indian Olympic Committee (hereinafter referred to as ‘IOC’) and the National Sports Federations (hereinafter referred to as ‘NSFs’) at the national level vis-à-vis the state and District federations respectively at the lower levels. Furthermore, various other actors such as the Sports Authority of India (hereinafter referred to as ‘SAI’) and the Ministry of Youth Affairs and Sports (hereinafter referred to as ‘MOYS’) play a key role in the industry.

Amidst this complexity, it is important to understand the relationship of the players or sportspersons with these organisations and other key stakeholders from a labour law point of view.

The primary problem is that of recognition of sportspersons as ‘employees’ within the purview of the applicable labour laws, insofar as employees are afforded better protection of the law – and, it could be difficult to ascertain the whether the role of sportspersons is that of ’employees’ or ‘independent contractors.’ This problem gets worsened owing to the fact that all relationships in the sports industry are governed by contracts and these contracts are generally skewed against the players inasmuch as the sports organisations and other stakeholders tend to retain complete bargaining powers.

Analysis

In this light, it has to be understood whether the application of labour law in sport can act as an effective tool in diminishing/ eradicating the imbalance of powers between various stakeholders in the sporting industry. This is done by recognising how labour law may be applied to sport, and then discussing the various aspects of labour law that can help reduce such imbalance, in the context of the United Kingdom and India, through a comparative study.

To address the research problem at hand, it is pertinent to discuss the applicable tests which Indian Courts have applied time and again to determine whether a person falls under the purview of ‘employee.’ Prior to proceeding, it should be noted that in general, all the NSFs are required to abide by the applicable labour laws in India.

RELEVANT LABOUR LAW TESTS TO DETERMINE THE EMPLOYMENT RELATIONSHIP

Direction and Control Test

The direction and control test is primarily applicable to determine any employment relationship, and it essentially looks at the degree of direction and control enjoyed by the superior over the subordinate. It aims to discover if the employment relationship between the employer and the worker is that of a master-servant relationship or not. It also aims to determine if the employer controls the nature of the work done and how the employee carries their duties.

An employer is said to have influence over a person if they were informed not just what to do, but also how to accomplish it. This can be illustrated by the fact that teams use non-playing personnel in a range of jobs. Many of these individuals will meet the requirements for obtaining employee status and will be granted the same statutory privileges as players, managers, and coaches, if the Club exercises control over them. However, clubs may also hire casual employees on zero-hour contracts. These employees will not be able to obtain wrongful dismissal or statutory redundancy rights, as they don’t fall within the ambit of “employee”, but they will be eligible to the national living/minimum wage and paid vacations, available to “workers.”

The Organisation Test

A person’s obedience to the employer’s directives in connection to the vital services supplied by the organisation demonstrates that the worker is a component or member of the organisation, hence establishing employer-employee relations. It is necessary to determine if the services offered are vital, integral, and necessary to the organisation, or are merely additional and incidental.

The Integrity Test

In this test, determination is made of an individual’s integration to the employer’s organisation or whether they have other comparable job interests in other companies. The second factor to consider is whether the individual is paid by the primary employer or by a contractor. If they respond yes to both of these questions, they will be classed as an employee.

Economic Reality Test

This test is used to determine the person’s level of economic dependency on the organisation.

Application in the European Union

In the case of Walker v Crystal Palace Football Club Ltd., while discussing the “employee” status of sportspersons, the Court of Appeals held that the argument that individual athletes’ talents put them beyond the control of the clubs that paid them was dismissed. Flowing from the control test, modern employment law still needs an element of control for a person to have employee status, however, it is not the sole factor for such determination. Other variables, such as whether a person is in business for their own account, are also taken into consideration. As a result, despite their seniority and control over club concerns, club managers are “employees.”

One of these other variables is that of “mutuality of obligations.” As was held in the case of Singh v National Review Board, mutual obligations where each contractual party incurs a responsibility to the other, must be present for a person to have “employee” status. Furthermore, as was held in the case of Carmichael v National Power plc, mutual obligations entail an employer’s commitment to give work and pay to an employee, and in turn, an employee’s obligation to complete the job given by the employer until the employment contract is terminated. This essentially embodies that employer job obligations, along with employee job obligations, are a necessary feature of any employment relationship.

Application in India

While the imbalance between the powers of sportspersons and administrators has existed in the global sphere in the past, in this comparative study, it is important to note that in the due course of time, initiative has been taken to eliminate such imbalance, and bring the sportspersons to the same bargaining position as their employers, ie, the clubs and administrators, largely through “collective bargaining agreements.”

However, in India, this challenge still persists, due to the fact that those enjoying the “employee” status enjoy more benefits, but determining such status continues to be a complex challenge, with no straight-jacket formula. An alternative solution to this problem was considered be to be the creation of unions, which would allow them to collectivise themselves and have superior negotiating power.

However, it is pertinent to note that the freedom to organise unions does not include the right to participate in “collective bargaining”, which has been proven to be a successful instrument in resolving imbalances, and employers have the option of refusing to recognise such associations. As a result, current developments in India indicate that another strategy that might be used to address the imbalance is the formation of a sportspersons’ association, as recommended by the Lodha Committee, inside the framework of the sporting authority. As a result of legislative or judicial acts, sportspersons’ representatives are given a place at the table in the committees of athletic organisations.

Article 19(1) of the Indian Constitution embodies the fundamental right to form unions and associations to deal with the uncertainty of status of workers. The Trade Unions Act of 1926 (hereinafter referred to as ‘the Act’) is the statutory mechanism governing the area and providing the definition of a union. Section 2(h) of the Act defines a union as:

“any association, whether temporary or permanent, established principally for the purpose of regulating relations between workers and employers; between workers and workers, or between employers and employers, or to impose restrictions and conditions on the conduct of any trade or business if any.”

Ergo, in consonance with the provisions of the Act, Indian sportspersons also enjoy the right to form unions and associations; however, this is only true for sportspersons who fulfil the subjective tests as discussed in the previous section – the correlation of this right and recognition of workers as employees was propounded by the Hon’ble Supreme Court in the case of Tirumala Tirupati Devasthanam v. Commissioner of Labour.

Other Relevant Judicial Pronouncements

• Freedom of Movement of workers in the EU- the Bosman Ruling

A relevant challenge arising out of the confluence of labour law and sports in the UK is that of the determination of applicability of the right to free movement. The right to free movement, as contained in Article 45 TFEU, is a core principle of labour law under European law. It applies to a “worker” as defined by European law.

In light of this, it is worth mentioning the case of Jean-Marc Bosman, which brought about a transformative change in European football, by helping diminish the imbalance of powers discussed above. Prior to the Bosman judgement, a player could not leave at the conclusion of their contract unless the club agreed to let him go for free or got an agreed sum from a purchasing team. In this instance, Bosman relied on the 1957 Treaty of Rome, which protected free movement for players across Europe. The verdict permitted a player to leave a club on a free transfer as soon as their contract ended, giving them power to demand massive signing-on bonuses and wages from new teams to compensate for the lack of a transfer fee.

• Recognition of a Club as an “Industry” in India- the Tata Sports Club Case

In this regard, it is worth noting that for an industrial dispute to be brought against a Club, in light of applicable labour laws in India, the same should be recognised as an “industry”. In the case of Ratilal B. Ravji v. Tata Sports Club & Another, the Bombay High Court analysed the question of whether the Respondent Club fell under the definition of an “industry” under the Industrial Disputes Act, 1947. The court relied upon the “dominant nature test.” Further, it took note of the fact that the club ran on its own rules and regulations, its aims and objects, among other factors, to decide that the Club would in fact fall under the definition of “industry”, making relevant laws applicable to it.

In the case of Secretary, Madras Gymkhana Club Employees’ Union v. Management of the Gymkhana Club , the Sports Club was treated to come under the definition of ‘Industry’ as provided in the Act; however, the dicta given was overturned in another case of Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors.

Conclusion

While the confluence of labour law and sports may be complex, it is crucial to maintain a balance between the powers of various stakeholders in the industry, as is evident from the above analysis. In the Authors’ opinion, the existing flaw is attributable to both, the insufficient and narrow labour laws as well as the lacking sports legislations in India. The NSFs, SAI, and the MOYS should be given clear directions and be imposed with heavy sanctions in cases of non-adherence to employment laws, and the labour laws should be given a wider judicial interpretation so as to include sports stakeholders, especially the sportspersons, within their purview.

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*For any query, feedback, or discussion, Aakash and Ria can be contacted at [editor@sportslawandpolicyreviewreporter.com]

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PREFERRED CITATION: Ria Mishra and Aakash Batra, Contemporary Labour Law Issues in the Indian Sports Industry – A Comparative Study, SLPRR <https://sportslawandpolicyreviewreporter.com/2022/07/17/contemporary-labour-law-issues-in-the-indian-sports-industry—a-comparative-study/(opens in a new tab)> July 17, 2022.