The EFL salary cap for League One and League Two has been withdrawn following a decision by an independent arbitration panel.
The caps were voted through by third and fourth-tier clubs in August last year and were set at £2.5m per club in League One and £1.5m per club in League Two.
However, the Professional Footballers’ Association (PFA) immediately challenged the caps, saying they were “unlawful and unenforceable”, and an independent panel has now forced the caps to be withdrawn.
The panel ruled that the EFL was in breach of the Professional Football Negotiating and Consultative Committee’s (PFNCC) constitution in introducing the caps.
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The PFA said it looked forward to working with the EFL on “reasonable and proportionate cost control measures for the future”.
PFA chief executive Gordon Taylor said: “We were disappointed that the EFL decided to introduce salary cap proposals, which were voted through without the proper consideration or consultation with the PFNCC.
“As a result, in August 2020, the PFA served a notice of arbitration on the EFL stating the introduction of the new rules were in breach of obligations under the constitution of the PFNCC. We are pleased the panel upheld the PFA’s claim.”
The EFL saw the caps as an essential part of ensuring clubs lived within their means, particularly given the pressure placed on revenues by the coronavirus pandemic.
The league’s own statement confirmed that following the decision, the Salary Cost Management Protocol (SCMP) regulations that were in effect during the 2019-20 season had been reinstated.
An EFL statement added: “The EFL will now discuss the matter of financial controls and implications linked to this outcome at a series of meetings with its member clubs later this week.”
The PFNCC contains representatives of the PFA, the EFL, the Premier League and the Football Association.
It must consider matters related to the rules and regulations related to the employment and remuneration of professional footballers.
The PFA’s statement continued: “Like everyone involved in football, the PFA wants to see sustainable clubs at all levels. We also recognise the huge economic pressure that clubs have come under due to the Covid-19 crisis.
“The PFA believes it is now in the best interest of the leagues, the clubs, and the players to work together and agree on rules that promote financial stability.”