In the beginning of March, it was brought to the attention of league officials that Origen did not have correctly set-up employment contracts with their Head Coach and their substitutes. Upon subsequently auditing all contracts between Origen and their team members, league officials discovered that while all the players on the starting line-up had contracts compliant with the Team Participation Agreement, none of Origen’s team members were correctly set up in regard to the financial framework required in Germany.
To explain further: all EU LCS teams are required to comply with the regulations of the jurisdiction they are operating under. This includes, but is not limited to, properly accounting, withholding and paying all required personal income tax, health insurance and social security contributions. While Origen had this properly reflected in the contracts they have with their starting line-up, the actual contributions and withholdings had not been processed properly.
During the investigation, Origen has been honest and straightforward about the issues and was swift in resolving them. As of March, contracts for all players and the Head Coach have been amended to comply with the Team Participation Agreement. Additionally, Origen has set up a payment framework which is compliant with both contractual obligations to Riot and their team members, as well as applicable labor regulations. However, we consider failure to comply with applicable regulations for payroll management as an employer to be a significant infraction. Even if in this case the players did not suffer direct monetary damages, they were exposed to legal risk as Origen failed to observe employer responsibilities. We will hence continue to monitor Origen’s payments to their team members for the duration of the Summer Split to ensure there are no further issues in regard to their remuneration.
Origen has violated the Team Participation Agreement and is hereby fined a total of 10,000€ for not setting up compliant employment contracts with their Head Coach and Substitutes and failing to provide and execute on the required payroll framework for all their Players at the beginning of the Spring Split.
Team Participation Agreement:
[...] the Team Owner has entered into an enforceable written employment contract with each such Team Member on Active and Substitute Rosters, full-time on Active and at least part-time on Substitute [Roster] [...]
The Team Owner shall comply with all national, federal, state, and local payroll, benefit, and other laws applicable to the Team, the Team Members and Team Managers, if any, including with respect to making deductions and contributions for social security, unemployment and similar taxes.
Q: How does this affect Origen’s Team Members?
A: Since the responsibility to comply with aforementioned regulations lies with the employer, Origen’s Team Members will not be negatively impacted by this as Origen will have to retroactively pay missing contributions according to applicable regulations in place. Since Origen resolved the issues within a timeframe which is considered reasonable by the German jurisdiction, health and disability insurance were still accessible during the window of non-compliance.
Q: Were players getting paid? How does this affect team payments?
A: The investigation by league officials showed the payments for the previous months were not missed, only that team members were not properly set up on Origen payroll, as stated in their contracts and required for employment.
Q: Why is this considered a severe infraction?
A: In this case we are looking at 9 cases of failure to properly set up payment structures as well as 3 cases of improper employment contracts. While players were paid, negligence on Origen’s side put both the players and the team at risk. Left unresolved, this would have put all involved parties at risk of non-compliance and potential damage to player welfare.
Q: Why is this ruling coming out a month after the investigation took place?
A In order to confirm that the situation was properly resolved, league officials worked with Origen for the past weeks to ensure that obligations were being met and the remuneration structure had been set up correctly.