Germany.

• Author: Schimke, Martin

1 Introduction

Hardly a transfer deal in professional football is concluded without the involvement of players' personal agents. Professionals in other areas of sport, and even lower-ranking athletes, are using the services of a "personal manager" too. These advisers, who are often called "managers" or, in team sport, "players' agents", represent their sports clients in negotiations with the clubs, promoters and sponsors. However, depending on the scope of their actions, the legality of what they do can be dubious. Whether and in what form the non-legal advising and placement of athletes is permissible depends, in essence, on compatibility with the following laws:

* Code of Social Law III (Sozialgesetzbuch, SGB III) (1)

* Act on Rendering Legal Advice (Rechtsberatungsgesetz, RBerG)

* Civil Code (Burgerliches Gesetzbuch, BGB), in particular [section][section] 312 and 355 ff. (2)

* Trade Regulations (Gewerbeordnung)

2 Licence to act as players' agent no longer required

The liberalisation of the labour market in 2002 also brought about considerable changes for the profession of players' agent.

According to [section] 291 Para. 1 SGB III old version, a licence was required for player agency unless one of the exceptions listed in [section] 291 Para. 2 applied. In the field of professional sport, player agency is the placement of those seeking work or employment. [section] 291 Para. 1 SGB III old version was abolished with effect from 27 March 2002.

Nowadays, any natural or legal person can set up as a private employment agent and offer the corresponding services without a special licence.

[section] 292 SGB III only provides for the possibility of introducing compulsory licensing in the area of international placement, whereby the Federal Ministry of Economic Affairs and Labour can decree by Statutory Order that international placement for certain professions and activities is the reserve of the federal labour office, the Bundesagentur fur Arbeit. The purpose of this authorisation by decree is to place restrictions on international placement when such restrictions are necessitated by labour market conditions.

Although the federal legislature has not yet made use of this authority. (3) Thus private employment agents no longer require a licence to engage in placement activities from and to other countries, which again is a far more liberal arrangement than under the old legal situation. According to [section] 292 Para. 2 SGB III old version, employment placement outside the European Union or an EMU contracting state required a special licence from the federal labour office, the Bundesanstalt fur Arbeit, which could only be issued subject to strict criteria. This licensing requirement was also abolished with effect from 27.03.2002.

However, compliance with the obligation pursuant to [section] 14 Trade Regulations (Gewerbeordnung) to notify the competent industrial inspection authority continues to be mandatory. Such notification is likewise required under [section] 14 Para. 1 (2) if the business is relocated, the object of the business is changed or the business is discontinued.

If the intended activity does not qualify as a trade (for instance in the case of job placement by public-law bodies without a profit motive (4)), no trade registration is required (5).

Sanctions may be imposed under the Trade Regulations (Gewerbeordnung). For particularly serious breaches of the rules on job placement, the most severe penalty is a prohibition of gainful economic activity, [section] 35 Gewerbeordnung.

A players' agent must be prohibited from engaging in gainful economic activity in the event of his untrustworthiness pursuant to [section] 35 Para. 1 Gewerbeordnung. The notion of untrustworthiness is a vague legal concept. If the trader is to be deemed untrustworthy, the competent authority no longer has any discretionary authority and the trader must be banned from gainful economic activity.

The administrative tribunals have full powers to review the question of the trader's untrustworthiness. The trader must be regarded as untrustworthy if, in light of his overall conduct, there is no guarantee that he will conduct his trade in the proper manner in future (6). This must be investigated on the basis of verifiable facts which permit a prediction about future conduct. Trustworthiness must be investigated specific to each sector, in light of the activity in question (7).

To specify these criteria, legal precedents have formed various case groups, whereby a trader and, by extension, a players' agent is particularly untrustworthy if he

* fails to honour his obligations to pay and declare taxes for an extended period, particularly if he has substantial tax arrears (at least 2,500 euros) or evades taxes,

* commits criminal or regulatory offences, especially if they are related to his business enterprise (such as tax evasion),

* is not solvent, which is particularly relevant if the players' agent administers third-party assets, e.g. players' assets.

Any blame must--as is usual in regulatory law--be disregarded when considering these factors.

3 What constitutes job placement?

The notion of job placement is defined in [section] 35 I 2 SGB III, which provides that job placement encompasses all activities the purpose of which is to introduce jobseekers to employers in order to establish an employment relationship.

According to [section] 296 I 3 SGB III, this includes all activities resulting in placement, including the preparatory and implementation stages.

According to legal precedent, the mere act of approaching someone for the purpose of establishing contact constitutes an activity aimed at effecting an introduction under the aforementioned definition (e.g. the remittance of a list of interested parties; suggesting an interested party; establishing telephone contact).

[section] 35 SGB III defines an "employer" as anyone intending to employ employees. A "jobseeker" is anyone interested in the placement of a working relationship. An employment relationship is typified by the employee's personal dependence on an employer, in contrast to self-employed activity. What must therefore be established is whether there are any traits typical of dependent work (e.g. being bound by the employer's instructions, integration into the business of the recipient of the performance etc.). The position in which the job placement is exercised, be it as an employment bureau, authorised representative, manager, employee, adviser (full or part-time) or in any other form, is immaterial. The sole criterion according to [section] 35 SGB III is the activity itself.

Nor does the act of placement have to be successful. Since [section] 291 II (4) SGB III was abolished, it is likely that the recommendation of manpower on a non-commercial, free-of-charge basis falls within the definition of job placement pursuant to SGB III.

It is unnecessary to differentiate clearly between the notion of job placement and that of career advice pursuant to [section] 30 SGB III. Since the licensing requirement was abolished, the distinction is irrelevant--particularly as, according to [section] 296 I 3 SGB III, career advice as an activity cannot be the subject of separate remuneration. Rather, the legislature intends that career advisory activity should be regarded as being compensated in the agreed agency commission.

The new Agents' Remuneration Order does not provide otherwise. Whereas [section] 13 of the old Employment Agents Order allowed for individual activities to be remunerated separately, there is no such provision in the Agents' Remuneration Order. Consequently, only those services that constitute neither job placement nor career advice pursuant to SGB III may be remunerated separately.

4 Categorising the players' agent contract

The legal categorisation of a players' agent contract is facilitated if pure player agency is separated from the other activities of an "adviser", "agent", "manager" or "marketer".

There are a number of permutations of the players' agent contract: the agency agreement pursuant to [section] 675 BGB in conjunction with [section] 611 ff. BGB, a brokerage contract pursuant to [section] 652 BGB or a mixed contract (service-type brokerage contract). If the players' agent contract issued by FIFA is used as the model, it will usually be a brokerage service contract (8). The service to be rendered by the players' agent consists solely of providing his athlete with the opportunity to conclude a contract. Like an estate agent mediating between tenant and landlord, the players' agent is a contact between club and athlete and that is where his role ends. Unless otherwise agreed, the players' agent only receives his commission if the negotiations are successful, i.e. the club and athlete conclude a contract based on the agent's activities. As this constitutes job placement, [section][section] 296 ff. SGB III must be observed.

In practice, however, an athlete's adviser or manager do not confine themselves to pure placement activity but--either with the player or as his representative--negotiate the contract to be concluded with the club or a sponsor. In addition, managers often assume numerous organisational tasks and advise the player on everything from media appearances to the "right" investment and "optimum" tax arrangements. Although all of these activities are, in principle, permitted, such management or advisory contracts are often in breach of the provisions of special laws. Of particular relevance in this context are the Act on the Rendering of Legal Advice, the Law against Unfair Competition (Gesetz gegen unlauteren Wettbewerb, UWG) and the general principles on unethical contracts, in particular the ban on oppressive contracts.

5 Prerequisites pursuant to [section] 296 SGB III new version

[section] 296 SGB III new version sets forth the prerequisites for the establishment of an effective agency contract between agent and player. The...