by Jean-Marc Albiol, Hogan Lovells
Many fired executives with poor performance records still leave with significant severance packages, creating misunderstanding and resentment among their company stakeholders.
The way the French Soccer Association ended the employment contract of its coach, the now famous Raymond Domenech, can give us some insight on why this happens again and again.
After the dismal performance of the French Soccer team in South Africa, it would have been logical to dismiss its coach for poor performance. Yet, according to Press reports, he has instead been fired on the grounds that he refused to shake the hand of the South African Coach and that he failed to adequately report his verbal dispute with one of his most-talented players, Nicolas Anelka.
The legal reason for dismissing him for misconduct rather than poor performance is simple: in French Law, poor performance does not constitute grounds for waiving the contractual compensation negotiated by Mr. Domenech when he started his employment.
So often, the company strategy is to collect information about actions that could be considered an example of misconduct. Those malpractices do not entitle the executive to any compensation and are used as starting points for negotiating the final indemnities.
Those transactions are not always transparent to the public or stakeholders. In the case of the soccer team, they are generating strong criticism by the supporters already very disappointed by the team’s performance.
This is certainly not the best way to assert a clear diagnostic of what went wrong with the coach and the Federation. Yet, the clock is ticking, because in French Law, you can only punish misconduct within 2 months of its occurrence.
Jean-Marc Albiol is a Partner at Hogan Lovells and a member of the Litigation, Arbitration and Employment practice. Hogan Lovells is one of the largest international law firms with offices in the United States, Europe, Asia, Latin America, and the Middle East.
