Contract termination in professional esports

After every season (in games such as League of Legends) or a major tournament (e.g. in CS:GO), decisions are made about changes in team rosters. This is usually due to unsatisfactory results of a particular organization, sometimes also internal conflicts. Making changes in teams seems trivial from the perspective of a fan. It is believed to be enough to simply inform the player that he will no longer participate in tournaments. The legal, but also economic and business perspective is a bit more complicated. Find out what contract termination looks like in professional esports.

Respecting the contract

Esports players – just like regular employees – enter into contracts with their organizations. Abroad, these will most often be employment contracts, but in Poland they should be services agreements. Every legal system in the world is based on the assumption that contracts should be kept. Of course, different legal systems provide for exceptions to this rule. Most often, however, they concern exceptional circumstances or gross negligence of a party that justify early and unilateral termination. In many countries, the mere unsatisfactory sporting disposition of the player does not allow for termination of the contract. Also the inclusion in the contract of a provision giving such a possibility to the organisation may be considered null. The parties are thus in a situation where the player does not take part in the competition. He should instead receive the remuneration due to him.

Contracts for a definite and indefinite period – regulations in different games

Any contract can be concluded for a definite or indefinite period of time. In professional sport and in the most popular e-sports games, players’ contracts are concluded for a fixed period. It is often dictated by the internal regulations of the entities managing the games. Much more difficult is the situation of players on contracts for an indefinite period – they are much easier to terminate, usually it is enough simply to notify the party about termination of the contract. Sometimes players can also represent the organization without a contract. It is important to note, that even if a player and an organization have not signed any document, it does not mean that there is no binding contract between them. Contracts can also be made verbally and the rules for their termination are similar to those in writing.

Regulations in the League of Legends

These rules are established directly by Riot Games, which manages the entire system of leagues and esports games on its own. Riot also independently resolves contract disputes and conflicts, thus ensuring that these regulations are followed. Although a specialized arbitration court has not yet been established, the organizer has a number of effective tools in its hand to force organizations to respect the established rules. The most severe of these is, of course, the loss of a place in the top tier of the competition.

CS:GO rules

In practice, CS:GO players’ contracts are also term-based. They usually last until the end of the calendar year. There are also many leagues and organisers with different rules and regulations. Most of these do not directly address the nature of player contracts. However, such regulations are gradually being implemented by some organizers – such as ESL, which organizes DreamHack tournaments. ESL requires player contracts to be in place at least until the end of the tournament season. The CSPPA (Counter Strike Professional Players’ Association) is strongly advocating for a uniform player contract policy across all organizations with a Counter-Strike section.

Less Popular Games

In less popular games, where organizers do not have specific rules for participation, it may be possible for players to be hired on contracts for an indefinite time that are easier to terminate. It is also common to represent the organization without a written contract. Practice shows that parties interpret the absence of a signed document as an opportunity to terminate the contract arbitrarily. This is a misleading conclusion.

How can the agreement be terminated?

This raises the question of how to effectively terminate the contract. Incorrect actions in this regard will result in the need to pay damages. A contract of indefinite duration can be terminated by giving notice. Its length depends on the relevant legal provisions. A fixed-term contract cannot be terminated before the end of its term. This is only permissible if the contract or the applicable legal regulations so provide. Also important are the rules set by the organizers of the games. In the League of Legends European Championship contracts can only be terminated with a just cause. There is currently no analogue in CS:GO. In CS:GO, restrictions in terminating contracts may be based on national law.

What is the risk for unjustified termination of the contract?

A common consequence of unjustified termination for players of all games is the need to pay damages. The amount of compensation can vary from one jurisdiction to another. The most common compensation will simply be the unpaid contract value, i.e. the amount the player would have earned if the club had not dismissed the player prematurely. In addition, there may be additional sanctions resulting from the internal rules of the game. These can be called disciplinary sanctions and should result directly from the organizer’s regulations. The most severe is of course exclusion from the tournament.

Is it possible to reduce the salary of a player who is sent to the substitute’s bench?

In practice, there are often provisions binding benching of a player with a reduction of his remuneration. Under many legal systems such an action may be considered illegal, even if it is explicitly written in the contract. With the current shape of legal regulations in esports, the national legal order should always be carefully analyzed in terms of admissibility of such provisions. In future, perhaps these practices will be explicitly regulated by the relevant entities.

Arbitration

Currently, the key legal problem in esports is the lack of permanent arbitration, similar to the Court of Arbitration for Sport in Lausanne and the courts of individual sports federations. There are already international organisations that aspire to be dispute settlement institutions. They are not yet widely and uniformly recognised by the community. The existence of arbitration is important insofar as, in relations between players and clubs, ordinary courts will not take into account the internal regulations existing in the game (e.g. the LEC regulations in League of Legends).

Summary

Many problems with esports players’ contracts would be solved by specialized arbitration courts. Currently, however, they do not fulfill their function. Consequences can be drawn at most by the organizers of the games, if they have established appropriate rules. In addition to this, regular courts can also resolve disputes. Another problem is the unilateral reduction of an esports player’s salary when the organization sends him to the bench. This topic will be discussed in detail in a separate entry.