Mr Green Is Wrong. Players Who Object To Joining Newco Rangers Aren’t In Breach of Contract

In which I politely suggest that Mr Green has got his interpretation of the TUPE regulations wrong, and that he could find his newco left with the players he does not want, whilst the ones he does want leave for nothing.

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When a business changes hands, the rights of employees are protected by the Transfer of Undertakings (protection of Employment) Regulations 2006 or TUPE for short.

These regulations are designed to protect the rights of employees when a business is transferred. There is no doubt that what is now proposed by Mr Charles Green, namely a transfer of Rangers assets to his “newco” would amount to a relevant transfer. Therefore, in law, the employment contracts of all of the employees transfer over to the new employer, and the contracts cannot be terminated by the new employer without this constituting an unfair dismissal and breach of contract.

However, in Rangers’ situation, the most relevant issues arise from the perspective of the employee who might be considering leaving.

Mr Green said today:-

“TUPE is very clear and all employees will be transferred under the rules and regulations. Of course, if the players choose not to transfer they will then be in breach of contract but we want all of the staff and players to get behind what we are trying to do.

“I always think if you are going to get news, good or bad, it is better if you get it earlier rather than later. If it is good news, you can party for longer and if it’s bad it gives you time to recover. That’s what we’ve got here.”

I am reluctant to disagree with Mr Green, who is advised by very experienced and expensive lawyers, but here I think he is wrong, as far as the statement in bold is concerned.

Whilst the worker automatically becomes an employee of the new company, he is not forced to do so. The employee has the right to object to this. If the employee objects to the transfer, then his employment does not continue with the new employer. It is treated as a resignation, and therefore the employee has no right to compensation from the new employer for redundancy or dismissal.

However, the new employer has no right of action for damages against the employee for terminating the contract. It is illegal and unenforceable to purport to contract out of these rights.

ACCORDINGLY, ANY RANGERS PLAYER WHO DOES NOT WISH TO JOIN A NEWCO CAN “OBJECT” AND WILL NO LONGER BE AN EMPLOYEE OF RANGERS (neither oldco nor newco).

Regulation 4 of the TUPE Regulations states, inter alia:-

(1) Except where objection is made under paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.

(7) Paragraphs (1) and (2) shall not operate to transfer the contract of employment and the rights, powers, duties and liabilities under or in connection with it of an employee who informs the transferor or the transferee that he objects to becoming employed by the transferee.

(8) Subject to paragraphs (9) and (11), where an employee so objects, the relevant transfer shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.

If a player walks out on a contract with his existing team, then in contract law his employer could seek damages from him, and sporting sanctions would likely be applied to the player, whether by way of suspension or a fine.

However, if a contract terminates under the circumstances above, the player would be a free agent. He would never have been an employee of newco, and therefore, despite Mr Green’s suggestion to the contrary, newco would have no rights to seek to pursue the player for breach of contract.

The only thing the player would need to do would be to send the SPL written notice that the contract was terminated and 14 days later the registration of the player is terminated.

Under Mr Green’s plan, the SPL share passes from oldco to newco. Accordingly oldco would not be a football club capable of seeking compensation for the player leaving for any new team. As the player would never have had a contract with the newco, then that entity also could not seek compensation from any team signing the player.

Effectively therefore “Rangers” could lose the entire playing staff, or at least those who would be of interest as free agents, for nothing.

Duff & Phelps, representing the employer, need to consult with and inform the employees about what is happening. This should have included the above information. Now, if one is a member of the office staff, for example, or a groundsman, or even a youth team player, continuity of employment is a good thing. If not, and one is a highly paid and marketable player, of whom there are still a number at Ibrox, then why not take the chance to leave as a free agent, and cash in? After all, a football career is short, and can be ended by an injury at any time. How can Mr Green guarantee the players will be paid at their contract levels, without European football and possibly in Division 3?

Will international players want to remain, where the chances of being selected for their national sides will reduce if not disappear, should they be relegated to Division 3?

If some top players leave for nothing, or make it clear they would object to a transfer to newco, would Mr Green try to reduce even further his offer?

What discussions has Mr Green had with the valuable players? Their agents would not be doing their jobs if they did not try to obtain compensation for their clients for giving up the right, effectively, to get an early “Bosman”.

TUPE rules protect the employee by limiting the ways in which the new employer can vary the contract. TUPE rules do not prevent the employee negotiating a better deal, or a new contract with the new boss!

Mr Green could find the players he wants to keep looking for improved contracts to stay at Ibrox. After all, if a player is sold by his club, the buyer has to pay a transfer fee. If the player is a free agent, then the money which would have made up the transfer fee can go to the player in wages or a signing on fee.

There may well be Rangers players loyal enough to the team to put Rangers before their personal financial interests. However, having already agreed temporary wage reductions, who could blame any of them who think of their own financial futures now?

Posted by Paul McConville

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26 Comments

Filed under Administration, Charles Green, Employment Law, Football, Rangers, TUPE

26 responses to “Mr Green Is Wrong. Players Who Object To Joining Newco Rangers Aren’t In Breach of Contract

  1. Jaksareli

    Paul you are spot on. I tweeted earlier that Charles Green has a less than accurate interpretation of TUPE regulations. Players or any other employee of RFC(IA) are not in breach of contract if they fail to transfer to a newco. They can transfer with same t’s and c’s or they can walk…simples

    • Carntyne

      I can’t understand this focus on the Rangers’ players transferring to a NewCo.

      The OldCo had to slash the wage bill by 75% because they could not afford the contracts the player are on.

      Surely the new club will be in the same position, as now the 1st of June has been and gone and the players, nominally at least, are entitled to their full wages.

      If the newco can’t afford those wages then they will be in breach of contract, so the players can walk for nothing.

      I may be missing something.

  2. Munch was a Gers Fan

    Hence the £7 million a year savings in the newco route – CG already knew that he is going to lose his top players. http://www.bbc.co.uk/sport/0/football/18373399 More spin or can he not remember what he said 4 days ago?

  3. iamtheperson

    a song for Charlie

  4. Tyke Bhoy

    oops there goes another rubber tree plant

  5. cmh64

    There are rumours elsewhere that TUPE wouldn’t apply in the case of liquidation. As any liquidation here is driven by HMRC and not Rangers(IA) and, I assume, the transfer to Newco happens first, does that mean this isn’t a CVL? Am I confusing two different situations?

    • Jaksareli

      I would recommend any employee of RFC(IA) contact the National Insurance fund through direct.gov.uk who will be able to advise you how to claim a redundancy payment in the event RFC(IA) are unable to pay what you are entitled to. Don’t quote me on this but I think it’s up to eight weeks pay and six weeks statutory holiday pay (or vice versa) up to a max of around £400 per week

  6. GDINCHCAPE

    It is not just not another example of Green (as Duff & Phelps have also done) playing with the use of words for the purposes of spin. You quite rightly point out that players can object and are not obliged to agree to transfer to Newco – I believe this may be the “breach” Mr Green refers to. He wants to be seen as the good guy and any players who don’t transfer to Newco as the bad guys. Those players “in breach” can then walk, no redundancy or compensation from Rangers old or new, the wrath of the Rangers fans for not sticking with it, but free to find another club under freedom of contract.

  7. Araminta Moonbeam QC

    As everything that comes out of this chappie’s mouth appears to be a lie, I think I’ll go with Paul’s more learned interpretation of the regulations.

  8. Greg72

    I have just watched a 5 minute interview (on the BBC website) with Paul Clark and, guess what, during the interview (unless I missed it) the word ‘creditors’ wasn’t mentioned once. Oh, but the ‘Club’ carries on after the sale.

  9. hoopsmon

    Green’s schoolboy interpretation of terms and conditions of TUPE must, surely, be excruciatingly embarrassing to those expensive lawyers who may – or may not – be advising him. I reckon he’s winging it and is preaching to an empty stadium. What a mess.

  10. HMRC are now in charge. The proverbial has hit the fan. The fraud squad and the police will be the next ‘preferred bidders’ to walk through the doors at Ibroke. There will be no hiding place for the cheats, liars and fraudsters.
    The m.s.m. will be the next part of the establishments pillars to fall. Division Three is the only place now for Cheats F.C. UEFA / FIFA are watching this very closely. The real Ranger’s story has still to unfold. Arrests and charges of some very surprising people will be the next big story on the agenda. Its the story that just keeps on giving…

  11. Den

    Green needs the top players on board so that he can gain from their transfer fees but they can stall on moving to Newco until they wring more concessions from him.

    The players who are in demand will know via their agents and others what their prospects are and will act accordingly in their own and not that of either of the Rangers. They can afford good legal advice too.

    The only players who will commit to Rangers are ones who don’t see great prospect of lucrative signing on elsewhere, by definition not the ones that are needed to generate ready cash.

    It would seem that this part of his money making scheme is under threat.

    The prospects of Rangers being able to toe the line in the SPL or SFL at the start of next season are remote, even assuming that they are accepted as members. I hope that the respective leagues have contingency plans should they accept Rangers.

  12. Niall Walker.

    Its bust and I was wrong, it seems Mr Whytes governance breached the conditions for agreeing to a CVA.

    I think you may find Mr Green will find some excuse within the next 48 hours to drop out altogether, no newco, just like Miller.
    Rangers fixed assets are only worth something to a commercially viable football club called Rangers. These fixed assets are worth nothing to a loss making fooball club called Rangers.
    The potential return for any investment is in the clubs profitabiliy and not its fixed assets.
    Bill Miller ran a country mile when his financial advisers estimated it would cost 30 million to bankroll the losses Rangers would occur in the first 3 years. They added up the cost of a 3 year Europe ban, possible further point deductions, loss of playing assets and the almost inevitable drop in attendance income.

    Mr Green has committed 5.5 million plus the transfer of various secured creditors totalling 9.5 million, add this 15 million to the projected 30 million loss and you have a grand total of 45 million.

    45 million to break even in 3 years and then the slow climb to profitability. Have a look how much Celtic’s profit is, and it has a bigger turnover, it is washers without Europe.

    The most optminstic projection is Rangers will earn 10 mllion every 4 years for CL group stages. Bearing in mind they will have an affordable but average team ( just like Celtic).

    Rangers is SIMPLY not worth 45 million, it would take 20 years to get your investment back. Celtic and Rangers are marginally profitable businesses if they are run at their best.

    If this deal goes through, Rangers( newco) will be in administration by August 2013. The season ticket sales will be horrendous and the losses will be too great for Mr Greens greedy little group.
    I simply do not believe Rangers attendances will not drop sgnificantly in years 2 and 3. They will be unable to win the league and there is no European prize for winning the dogfight for 2nd, 3rd or 4th. Add to this the loss of fans who don’t accept the newco and glory hunters.
    Ticket sales are approx 25 mllion for 46,000 average, each 10% drop is 2.5 million loss. A 30,000 average crowd would lose 8.5 million, Bill Millers projection of a 30 milion loss in 3 years is feasible when you add in ground repairs.

    Rangers are too big to downsize to a small turnover, this saga has a long way to run. I fear the worst.

  13. JimBhoy

    if Green is there at all it’s because BDO/HMRC give him first shot… I doubt it will work, players can and should walk, loyalty jeez. I reckon the SFA will soon ban them for a year< Green paying for that, I doubt much. sfa you saw the real facts sort it the fuk out…. spl clubs will never bring those cheating b@stads back.. sympathy has left the building….

  14. Niall Walker.

    Do not kid yourself, this was a huge multi-million pound decision, it robs Rangers of a potential 30 million in European prize money plus it reduces the sellability of season tickets for 3 years.
    It is conceivable Rangers average attendance could drop to 30,000 losing a further 8 or 9 million per year for 3 years.

    Do you think Mr Green is not just a little bit more than disappointed, the newco bid was a bluff aganst HMRC, and they just called it, I believe Green will fold.

  15. thembeatles

    The strong cohort of their supporters shouting for division 3 seem very confident they will come up a division every year. I would’nt be so sure about that with the financial constraints they will have on them

  16. weecg

    Football clubs are an unusual business in that their main asset is very often their players and their valuation is dependent on the remaining term of their contract. If as you suggest the liquidation means that the players can now simply walk away and negotiate their own contracts elsewhere then that very substantial asset now has zero value. It would appear perhaps that D&P (or indeed HMRC) should have anticipated that outcome on day one and had they simply liquidated at that time they would have substantially reduced the ongoing costs and provided a higher return to the Creditors (supposedly their main responsibility).

  17. Richboy

    I hate to go on about D&P again but when is someone going to take them to task for what appears to me to be incompetence and deriliction of their duty towards creditors.

    As already posted, neither Whitehouse nor Clark barely ever mention the creditors. A statement from one of them the other day said the main priority of the administrators was to make sure the club continued to exist.

    Their rhetoric and actions throughout this saga have been suspect to say the least. According to some analysts they have spent 1.5M in legal fees for no net result.

    Their incompetence in dealing with Bill Miller was monumental. When Millers legal team were told the SFA were not likely to be too serious about the current investigations, because the Chairman was ex Rangers, I fully expected to see both Whitehouse and Clark being huckled into a van and taken straight to the Old Bailey.

    I could not beleive it when they claimed the timing of the announcement by the Tribuanal affected their announcement of a preferred bidder. They had a representative at the Tribunal who could have raised their concerns.

    It now appears that they do not even know the basics in regard to TUPE.

    Having said all of the above, D&P are the only winners in this sorry mess. Seems to me if the Law is an ass then these guys fit right in.

  18. Jack Sparrow

    Regulation 8(7): “Regulations 4 and 7 do not apply to any relevant transfer where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted ***with a view to the liquidation of the assets of the transferor*** and are under the supervision of an insolvency practitioner.

    Paul,

    Regulation 4 does not apply, it would seem.

    Care to elaborate on whether or not you considered this part of the same Regulations before writing this blog?

  19. As a general rule it is not legal to assign, sell or transfer an employment contract (I.e. McDonalds can’rt just package up all the employment contracts of all their staff and sell them to KFC), but TUPE provides a mechanism for doing so when a business is transferred, and ensures that all of the employees are protected when the business is transferred, but when TUPE applies it does not oblige any employee to transfer if they give the requisite notice of objection. Where TUPE does not apply (ie. when the putative transferor is insolvent) then the assignment of a contract of employment would simply be illegal, and would not be binding on the employee. The original contract simply lapses when the transferror is liquidated.

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