Quinky is right. If you are sacked from an employment contract with one year left (in MT's case) you can , of course, bring a claim for your salary for that one year period. But if you get another job and mitigate your loss (either partly or totally) then you can't sue for all your 'missed' salary as that would in effect mean you were being paid twice. You can only sue for your 'loss' i.e what you can't recover from another job elsewhere. Leicester would only be on the hook for the whole year's money if MT wasn't able to get another contract somewhere. So it is unlikely that Leicester will have to pay out much if MT is in demand and gets a high paying club abroad. That, at least, is the theory. However Leicester may try , to avoid wrangling and arguing for a period of time, to settle on an amount to pay him which would be less than he is due but gets rid of the potential litigation. It's often a timing exercise. That's often how these disputes pan out. As to the salary cap, well if Leicester pay him nothing for the 12 months because he gets another high paying contract then I suspect there is nothing to go towards the salary cap-what will go to the cap is anything that they actually pay him.

Quinky is right. If you are sacked from an employment contract with one year left (in MT's case) you can , of course, bring a claim for your salary for that one year period. But if you get another job and mitigate your loss (either partly or totally) then you can't sue for all your 'missed' salary as that would in effect mean you were being paid twice. You can only sue for your 'loss' i.e what you can't recover from another job elsewhere. Leicester would only be on the hook for the whole year's money if MT wasn't able to get another contract somewhere. So it is unlikely that Leicester will have to pay out much if MT is in demand and gets a high paying club abroad. That, at least, is the theory. However Leicester may try , to avoid wrangling and arguing for a period of time, to settle on an amount to pay him which would be less than he is due but gets rid of the potential litigation. It's often a timing exercise. That's often how these disputes pan out. As to the salary cap, well if Leicester pay him nothing for the 12 months because he gets another high paying contract then I suspect there is nothing to go towards the salary cap-what will go to the cap is anything that they actually pay him.

What about the idea a la Shabbycens of loaning players out?

If the Telegraph's sources are correct, Tuilagi would be willing to accept a 'drastic' pay cut to stay in England, which makes you wonder why he chose to leave Tigers:

Manu Tuilagi’s desire to play for England and tour South Africa with the British and Irish Lions next summer is likely to keep him in the Premiership even if he leaves Leicester Tigers.

Telegraph Sport understands that 29-year-old Tuilagi, set to move on from Leicester after failing to agree amended terms with the East Midlands club, would be willing to take a drastic pay-cut to move elsewhere in England and prolong his Test career.

If he successfully claims for damages from Leicester, he could recoup some of the difference from his hefty Tigers wages while, crucially, remaining available to England.

His representatives are believed to be exploring that possibility while sounding out potential Premiership suitors.

Although squad budgets have been squeezed around the country due to the Covid-19 pandemic and the salary-cap reduction, Tuilagi could be a cut-price wildcard for any teams chasing the 2019-20 Premiership title.

On Wednesday, a source suggested that the names of Tuilagi and Jordan Taufua, also linked with a departure from Leicester, had been circulating among bosses of French clubs.

However, there was a “strong feeling that he will stay in the UK” among French recruiters on Thursday morning, both because very few Top 14 cubs would be able to meet his market value and because squads are close to settled ahead of the 2020-21 season start in September.

Given the Rugby Football Union’s selection policy, a move abroad would put Tuilagi’s England career on hold and possibly end it given his age and the midfield talent available to Eddie Jones.

Nothing to stop a club offering him a much smaller contract for the first year with an increased payment in a second or third year.  That way Tigers are still on the hook for the balance in the first year.  Might even appeal to Manu more that way as the principal of honoring contracts would be upheld, with Tigers having to pay up an incurring the legal costs as well.

As much as I dislike this idea, I can see Tuilagi heading to Saracens. With Barritt having retired and a lot of cost-cutting, they might have money to spend.

They could also pay him for corporate events. Apparently you do not even need to go....

Of the five players released by Leicester I’d say Greg Bateman would actually be the most useful addition to our squad.

That said, I think Quins might be better off focussing available resources on keeping Ibitoye and finding another Scrum Half.

... and the Guardian as well.  They're also saying it's a long term deal that would allow him to claim compensation against Leicester if earns less at Sale.

https://www.theguardian.com/sport/2020/jul/11/manu-tuilagi-set-to-move-to-sale-and-keep-england-career-alive

His first game for Sale could be at the Stoop on 14th August.