The legal nature of buy-out clauses in Spain revisited

The legal nature of buy-out clauses in Spain revisited
There is a misconception that buy-out clauses are mandatory in Spain. As a result of recent decisions both at the national and international levels, their content has been subject to interpretation, making clear their origin, legal nature and practical effects.

Spanish Royal Decree no. 1006/1985 (Royal Decree),[1] which provides for the special relationship of professional athletes in Spain, contains up to a total of nine grounds for terminating employment relationships subjected to this regulation. Among them, Article 16 par. 1 regulates the most famous (and problematic) one: the termination of the employment contract at the athlete’s will, mistakenly known as “cláusulas de rescission (buy-out clauses) when inserted in employment contracts.

The abovementioned article of the Royal Decree provides as follows (free translation):

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