Esports series #1: Esports and Employment Law: Staying ahead of the game
As esports continues to skyrocket in popularity, with escalating salaries and betting stakes, the industry faces unique employment law challenges that mirror those of traditional sports in some respects as well as having issues specific to esports. From determining the employment status of players to addressing concerns about diversity and workplace conduct, the legal landscape is as dynamic as the games at the heart of this booming sector.
Employment status: Employees or Contractors?
One of the core issues is the classification of esports players—are they employees of their teams (or "clans") or self-employed contractors? This distinction is crucial because employees generally enjoy broader rights and protections, including entitlements to holiday pay, sick pay, and minimum wage, in various jurisdictions. Misclassification can lead to severe consequences for esports organizations, including financial liabilities for unpaid taxes and penalties, reputational damage, and potential unenforceability of contractual terms. With little regulation specific to esports, the employment status of an esports player is determined in the usual way and this varies across jurisdictions.
Restrictive covenants and contractual terms
Employers often seek to impose specific restrictive covenants on their players, such as non-compete and non-poaching clauses, to prevent players from joining competitors. However, the enforceability of these clauses varies significantly across different jurisdictions and continues to evolve, as we discuss in our in-depth briefing.
Within esports, some organizations and leagues have also taken proactive steps to limit or prohibit these clauses to foster fair competition and player mobility.
Ensuring Diversity, Equity, and Inclusion
As with traditional sports, the esports industry has been criticised in recent years for a perceived lack of diversity. In this context, esports organisations are increasingly recognising the role that “positive action” measures can play in preventing or remedying workplace discrimination and fostering an inclusive culture. Our in-depth briefing looks at the legal framework which employers must consider when implementing positive action measures.
Dealing with Discrimination, Bullying, and Harassment
Unfortunately, the esports world is not immune to workplace misconduct, including bullying, harassment, and discrimination. Our in-depth briefing looks at actions industry participants can take to minimise legal and reputational risk, including: clear and accessible policies; a commitment to fair processes; and building an open and supportive workplace culture.
Looking ahead
The rapidly evolving nature of esports demands that all stakeholders, from team owners to legal advisors, stay vigilant and proactive in addressing employment law challenges. As the industry grows, further scrutiny and regulation are likely, underscoring the importance of informed, strategic responses to these emerging issues.
Stay tuned for more insights in parts 2 and 3 of our esports series. If you would like to discuss any of the topics raised in our esports series, please do get in touch with any of our key contacts.
