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Why esports businesses should pay close attention to employment law | Opinion

JMW Solicitors' Chris Deeley explains what makes esports businesses special as employers – and what many of them need to do better

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Following the pandemic-induced boom in esports viewership, and the steady deluge of non-endemic financing that followed it, the industry now appears to have slowed to take stock. FaZe Clan and The Guard are only the most recent among a slew of big-name organisations making layoffs, and the broadcast side of the industry has faced a similar fate. Clearly, the age of esports as a profit-driven business is firmly upon us.

Despite this rise into mainstream legitimacy, it is easy to get the sense that some organisations do not fully appreciate their legal duties as employers. Esports stands as potentially unique among entertainment industries in that a significant number of the biggest businesses will have spent long periods as bedroom projects, or been birthed out of online forums or Discord servers. The consequence is a lack of corporate polish, which is responsible for giving esports much of its charm and community feel, but also enables more questionable practices to slip by.

To date, these have gone relatively unchecked before the courts. However, if esports is to cement itself as a pillar of the entertainment industry, it will be crucial for its endemic businesses to mature in their approach to employment.

From my point of view as an employment lawyer, esports is also a fascinating case study. The profiles of the people involved (particularly their age), and the fact that esports is inherently highly online, mean that it is a decent picture of the future of work more generally. Issues such as remote working, employees with personal brands, and dealing with unsavoury disciplinary incidents, all of which have cropped up in esports, are ones we often come across.

With that in mind, here are five key areas where employment law will be especially relevant to esports businesses, and what they should be thinking about:

1. Employment status

Top of the list is something that is a hot topic in many industries right now: namely, how are the relationships between businesses and the people that work for them governed? In many cases, the contracts for esports staff may be simple ones covering purely commercial and monetary terms. This is particularly the case for individuals who do not work on a full-time basis, or who offer their services per-event – a category that likely includes lots of broadcast talent and professional players.

Where the individual is pursuing their dream or is young and naïve, the imbalance [of the employment relationship] can only get worse

However, in the UK, the legal status of a relationship between company and worker is not defined by its label. Instead, courts will consider a wide range of factors. Some of the key issues are the extent to which the business can exercise control over the individual, in terms of directing their activities and the work they do, and whether the worker can send a different person as a substitute to do their work. In practice, particularly for playing or broadcasting talent, there is a significant chance they would be considered employees – especially because in most cases they are recruited for their own individual skills.

The reason why this matters is that a number of key employment rights are tied to employee status, including holidays and sick pay. Employees also benefit from protections in areas like working time and the minimum wage, where non-employees often do not. These will come with associated costs for the employer, and may differ from common industry practice.

Most likely the reason that esports employers have escaped scrutiny on this issue for so long is down to the imbalance of bargaining power inherent to any employment relationship. Where the individual is pursuing their dream or a passion project, or is relatively young and naïve, this imbalance can only get worse.

2. Discrimination, harassment and misconduct

Sad though it is to say, if you have ever played an online multiplayer game, there is a good chance that you have been insulted, harassed, or called a slur at least once. To compound the misery, it is all too common to hear such stories arising inside the esports ecosystem, both perpetrated by industry figures but also directed at them. The main scene I personally follow is Overwatch, and there it feels like barely a week goes by without some new scandal coming out of the woodwork.

The unfortunate reality is that the cloak of anonymity, combined with the relatively brief interactions characteristic of online play, provide an environment where unacceptable conduct is difficult to attribute to a real-world individual, and therefore free from consequence.

Chris Deeley, JMW Solicitors

All employers in the UK, including those in esports, are subject to duties under the Equality Act to not discriminate against, harass or victimise those that work for them. Since an employer can be held liable for its staff's actions, they also must take steps to stop their employees from acting in these ways towards each other.

The best way to avoid this sort of liability is by ensuring that proper training is provided, along with clear and accessible policies or codes of conduct, so that employees can be under no illusions about what is expected of them. The other key measure is to commit to a thorough and impartial process to investigate any genuine complaints.

At present, there is not a requirement on UK employers to protect their employees against harassment from third parties or the public, but there are Government-supported plans to introduce such a duty in the near future. This might mean that organisations need to, for example, ensure that their Twitch chat is properly moderated.

Even where there is no risk of an esports organisation being held directly liable for its players' misconduct, there may still be commercial risks from association with an individual's wrongdoing. This is particularly the case for players or talent who are visible public figures using their employer's brand, such as streamers.

Again, the key is to take allegations seriously and investigate them in a thorough, professional manner, before taking proportionate action in response. This is something that most esports businesses should be capable of, given that the same approach has historically been widely adopted towards cheating accusations.

3. Conflicts of interests between employee and employer

Another quirk of esports is that a vast number of professional players will also run their own personal streams when not engaged in competition. In effect, this amounts to having a side-gig offering the same product (albeit with a different slant) to that of their employer.

In most industries this would be incredibly unusual, and normally would be outright forbidden by an employer. However, whether motivated by the commercial opportunity or simply seeing the futility in trying to prevent it, esports has largely embraced the idea. Certainly, allowing players space to build their own personal brands and followings has helped professional gaming to often feel more personal, and less corporate and sanitised, than other entertainment products.

This does not mean that disputes do not arise in this area, and in fact it was the subject of perhaps the biggest formal legal case to arise in esports. In 2019, Fortnite player Turner "Tfue" Tenney sued FaZe Clan, alleging that his contract was overly oppressive and restricted him from plying his trade. This included claims that FaZe collected up to 80% of the revenue he made from tournament prizes and third-party sponsorships, while also preventing him from pursuing further lucrative endorsement deals. FaZe, for their part, countersued alleging that Tenney had disparaged the team, interfered with its commercial activities, and sought to set up a competing esports team while still employed.

All employers in the UK, including in esports, are subject to duties under the Equality Act to not discriminate against, harass or victimise those that work for them

Though the case having settled means those allegations will never be tested in court, it does shine a light on the tension at the core of the org-player relationship. Players want the freedom to be themselves, while organisations want to control what they do to protect their brand image.

Esports is rife with examples of players saying or doing things on their personal streams that are not in keeping with what their teams or tournament organisers would want – frequently while those streams are adorned with the team's branding. From an employment perspective, the approach to managing this has tended to be through detailed contractual restrictions, often with fines and suspensions for noncompliance. However, it is important to also back these up with proper training and policies, so that organisations can be crystal clear that their players know what is expected of them.

As an aside, it is worth pointing out that this is an issue that even much bigger businesses sometimes get wrong – see for example the BBC's debacle earlier this year in handling Gary Lineker's Twitter comments.

4. Health, safety and safeguarding issues

Another aspect in which esports stands unique from other sports is that a significant number of the best players in many titles are children. Rules on employing children in the UK are complicated, but the basic position is that children under 14 cannot work at all, and those who are at least 14 but under 18 are subject to strict rules on the types of work they can do and the length of time for which they can do it.

The authorities are likely to take issue with anything that risks a child's education or their health. It is also highly likely – though as yet, untested – that children working in esports in the UK will need specific licences, which are required for children involved in all live performances. In practice, many competitions and teams have opted instead to avoid all of this legwork by simply setting a minimum age of 18.

Further, there is also the issue of safeguarding. Even if an esports organisation is happy to jump through all the hoops to sign a big underage talent, they will be subject to various obligations to protect the safety and welfare of that child. These include more "typical" health and safety duties but also ensuring that the child has proper supervision and access to education. It may also be necessary to conduct enhanced background checks on all other employees to ensure that they do not pose any risk working with children.

(For a much more detailed dive on the employment of children in esports, I recommend Adam McGlynn's blog post on the topic.)

The relationships between esports organisations and their players are similar to those in sports, but in many ways they are unique

Even with over-age employees, esports businesses still need to pay attention to their duties to ensure a safe working environment. This includes not just physical safety, but also protection from mental health risks and burnout.

Unfortunately, this is another area in which there are many stories of organisations falling down. Tales of gruelling practice schedules and inadequate facilities are far from uncommon. At the top end of the scale there are scandals on the level of the Call of Duty League's Adderall problem, with players being put under pressure to abuse performance-enhancing prescription drugs – clearly a world away from a safe workplace.

In a competitive environment, it may be tempting to do whatever it takes to stay one step ahead, but organisations must ensure that they are not compromising their players' health in doing so.

5. Careers for life?

Lastly, let me touch on a pastoral issue. The evidence suggests that being an esports player is rarely a career for life. Titles drop in and out of favour which simply doesn't happen in traditional sports (I am still waiting for Football 2), and the intense level of reflexes required often pushes players out as early as their mid-twenties.

Against this backdrop, esports has been on the cusp of the mainstream for long enough now that we are starting to see the first substantial wave of professional players who are "retiring" to move on to more permanent careers.

It is highly likely – though as yet, untested – that children working in esports in the UK will need specific licences

In some cases, this step is taken early enough to have not really made an impression in a player's long-term goals – for example, a 21-year-old might have already played for four or five years before heading off to university at a relatively "normal" age. However, for those retiring in their mid to late twenties or even later, there risks being a bit of a bump back down to earth.

Some may end up staying in the industry in adjacent roles – coaching or broadcasting, much like in traditional sports, seem to be the go-to – but there are not enough such roles for everyone, nor are all players suited to them.

The question, then, is what should organisations as employers be doing to assist their players with this inevitable step? One idea could again be to borrow from mainstream sports, where the transition from junior teams to being a senior professional is one that only a few make. Many sporting academies now operate with this in mind, emphasising personal development and education as much as the sport itself.

And there is a lot in esports that can be beneficial in the long run. Teamwork, strategy and communication are crucial in many titles, while solo games can build focus and discipline, all valuable traits in many professions. Video games are not the social malady that they were portrayed as for so long, and esports organisations would do well to help their players build lasting skills.

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