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 Posted by ESPN Staff
Aug 19, 2008

Ex-Chelsea director loses tribunal wages claim

A disgruntled former executive at Chelsea has failed to win a six-figure compensation payout from the football club.

Paul Smith, former group business affairs director, took the club to London Central Employment Tribunal for 'unlawful wage deductions' which he claimed totalled £366,250.

But the tribunal panel's judgment which was made public today, was that the club did not make unauthorised deductions from his wages.

Instead the club were ordered to pay only £4,084.10 towards Smith's legal costs.

Smith was employed by the club in 2003 but, due to an ongoing dispute over wages and a bonus, never signed an employment contract.

He claimed he was promised various salary and bonus rates, as well as lump sums, during his employment and that chief executive Peter Kenyon offered him a salary of £500,000 plus a £250,000 bonus while 'hungover'.

Kenyon told the tribunal no such meeting took place and said he would not have had the authority to make wage deals with Smith.

He also said no executives at the club were eligible for bonus payments at that time, and claimed Smith had failed to make a 'genuine effort' to agree a contract.

A spokesman for Chelsea said: 'We are pleased with the verdict of the employment tribunal in the case brought against us by Paul Smith.

'The key parts of the case were all found unanimously in our favour.

'Chelsea had, prior to the tribunal, agreed to accept a finding of unfair dismissal and to pay full compensation for this to Paul Smith.

'To take the case further was unnecessary and based on little evidence, as demonstrated by the outcome.

'Chelsea will abide fully with the findings of the tribunal.'

Smith said: 'Chelsea have already admitted to dismissing me unfairly and I am pleased that my costs of that part of the claim have been awarded against Chelsea.

'Whilst the judgment was not wholly positive for me I am pleased that the tribunal rejected Peter Kenyon's evidence that no agreement was reached in February 2007.'

He had already announced plans to claim for £1million compensation for his notice period and the tribunal judgment said Smith 'was entitled to a reasonable period of notice of termination of his contract of employment'.

Today he said he would add unpaid benefits to his High Court claim.

Harriet Bowel, of Russell, Jones and Walker, who acted for Smith, said: 'My client has been treated very unfairly by Chelsea and should be compensated as a result.

'Elements of the tribunal's ruling bode well for the forthcoming High Court claim and we will be issuing proceedings against Chelsea for breach of contract.

'We are also considering an appeal against the part of the tribunal's judgment which was not in Mr Smith's favour.'

The tribunal said Kenyon accepted the job of chief executive at Chelsea but was unable to take up the role immediately because of a contractual obligation to Manchester United.

His gardening leave from Manchester United began in September 2003 and was expected to last a year, although he was eventually allowed to join Chelsea in February 2004.

Smith was approached by Kenyon to act as a consultant to the board of directors at Chelsea, from September 2003 until Kenyon's arrival.

Smith received a draft contract in October 2003 which gave his salary as £300,000, with reviews each July.

It said he was entitled to six months' notice of termination of his employment although other club directors had a notice period of 12 months.

Smith did not sign the contract as he had expected a higher salary and different terms.

After Kenyon joined Chelsea, Smith reverted to the role of group business affairs director.

Smith told the tribunal he met Kenyon for lunch on April 12 2005 and produced notes, although Kenyon had no recollection of the meeting.

The tribunal concluded the notes did not suggest an agreement had been reached about Smith's pay and conditions.

Smith told the tribunal about a second meeting on February 27 last year where a salary increase and revised conditions were agreed.

Kenyon told the tribunal an agreement on a new salary of £400,000 was not reached until April last year but the tribunal said his argument was 'inconsistent' with evidence which he gave to a grievance hearing last September.

It concluded that 'no agreement was reached' at the meeting except that Mr Smith's salary would rise to £400,000, backdated to January.

A contract in line with those given to other directors was drafted in June last year. It included a one-off payment of £155,000 from the club into Smith's pension fund.

The draft was never given to Smith to consider or to sign.

The tribunal's judgment said: 'We have had no convincing or satisfactory explanation from the respondent as to why a draft contract, available in the office from June 6 2007, was not presented to the claimant to consider and sign by the start date of July 1 2007.'

Its conclusions added: 'It is for the High Court and not for us to determine whether this situation amounts to a breach of contract and, if so, the quantum of damages.'

Instead Smith was told, on July 27 last year, that his role as group business affairs director was redundant.

The tribunal said Chelsea had already conceded that Smith's dismissal was unfair and paid the maximum compensatory award of £60,600, together with a basic award of £1,395.

The tribunal judgment said it was unable to make any award for compensation as Smith had not succeeded in his unauthorised deductions from wages claim.

The £4,084.10 Chelsea were ordered to pay Smith was the total costs of his successful case for unfair dismissal.

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