Can Someone Offer Training on TUPE to Sevco, McCoist and Green?

In which I suggest that Mr McCoist and Mr Green really do not understand TUPE, and that Mr Green threatening action against those who he wants to be his own players and against other clubs, seems an unusual way of winning them round to backing his team entering any league at all!

I also address the purpose of TUPE and the “insolvency” exemption, and produce a judge’s lament about attempting to interpret legislation leading to despair and despondency.

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Rangers have come out all guns blazing today – directed at their own players! This is what one might view as an innovative approach to man management. After all, footballers are known as potential divas, who can be upset by the slightest thing, and the risk for a manager in “losing the dressing room” is feared.

I hesitate to suggest that Messrs Green and McCoist need better to understand the legal advice they are getting … but they really need better to understand the legal advice they are getting!

Their statement from today is shown below.

As usual, my comments are noted in bold beneath the relevant comments.

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RANGERS manager Ally McCoist has this afternoon released the following statement.

He said: “It has been reported that a couple of players have indicated they want to challenge the transfer of their contracts. This is news to me and no player has spoken to me about it.

For Mr McCoist’s benefit, here is a link to the story about Mr Aluko and Mr McCabe objecting to the transfer. Clearly Mr McCoist hasn’t attended any seminars on TUPE. First of all, the players are not “challenging” the transfer. They are “objecting” to it, as is their right.

There are two possible interpretations of TUPE here.

Under Regulation 4 of The Transfer of Undertakings (Protection of Employment) Regulations 2006 on the transfer of a business, the rights of the employees under their employment contracts continue over to the new employer. However, under Regulation 9 the Regulations “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”.

If Reg 4 applies, an employee can choose whether or not to work for the new employer. The new employer must employ the employee, and has no choice, and refusing to employ the employee will be automatically unfair dismissal. The ball is in the court of the employee. It is the employee’s rights which are protected by these regulations, not the employer’s.  

The alternative which was suggested is that, under Regulation 8, dealing with Insolvency, Regulation 4 does not apply. In that case there would be no transfer of contract to Sevco, and any player objecting to the transfer would never have had a contract at all with Sevco. The Bosman case made clear that footballers have the right not to be bought and sold without their consent.

In any event, the Insolvency exception does not apply. In Key2Law (Surrey) LLP v De’ Antiquis [2011] EWCA Civ 1567 the Court of Appeal determined that administration is not one of the processes which triggers the exception under Regulation 8 (7). Therefore TUPE applies.

In Secretary of State for Trade and Industry v. Slater and others [2008] ICR 54, Elias J explained ‘the rationale behind regulation 8’ as follows:

“13. The scheme of the 2006 Regulations is broadly this. Typically, where there is a transfer of an undertaking, regulation 4 provides that the employees are automatically transferred to the transferee with the latter taking over all the liabilities of the transferor.

14. Regulation 7 provides that any dismissal will be automatically unfair unless it is for an economic, technical or organisational reason connected with the transfer. However, it is recognised that to apply these principles to insolvent businesses would discourage potential purchasers of the business from acquiring the business. That would be to the detriment of the employees.

15. Regulation 8 therefore aims to relieve transferees of the burdens which would otherwise apply in certain defined circumstances.

16. Essentially this is done in two quite distinct ways. The most extensive exception from the effect of the Regulations is created by regulation 8(7) (which is intended to reflect the provisions of article 5(1) of Directive 2001/23). This provides that where the insolvency proceedings are analogous to bankruptcy proceedings and have been instituted with a view to liquidation of the assets, then neither regulation 4 nor 7 applies at all. There is no transfer of staff to the transferee and no claim for unfair dismissal against him (although other provisions of the Regulations, such as the information and consultation regulations, continue to operate).

17. A narrower exception is carved out where regulation 8(6) applies. This applies to insolvency proceedings where the purpose is not with a view to liquidation of assets. This does not altogether exclude, but it does modify, the effects of regulations 4 and 7. It means that the transferee does not pick up all of the liabilities which would otherwise transfer to him.

18. Regulation 8(3) has the effect of making the Secretary of State liable for all the obligations still outstanding at the date of the transfer which are caught by Part XII of the 1996 Act [the Employment Rights Act 1996]. There is a deemed dismissal at that stage for purposes of fixing those liabilities even though there has been no actual dismissal. However, to the extent that the liabilities exceed the statutory limits, liability transfers to the transferee.

19. Regulation 8(5) has the effect of making the insolvency fund rather than the transferee liable to meet any redundancy liabilities. (These will typically arise where there are dismissals for redundancy which are not for economic, technical or organisational reasons. The issue does not arise here.)”

In the Key2Law case, cited above, the Court said the following:-

“Regulation 8(7) gives domestic effect to article 5.1 of the 2001 Directive. It chose to do so by an almost verbatim adoption of the language of article 5.1, language that would not, I would think, but for the particular task in which the draftsman was engaged, otherwise have been his natural choice. ‘Bankruptcy’ is a term of art that, under the law of England and Wales, refers only to an individual’s status following a judicial adjudication made in consequence of his insolvency. It has no application to corporate insolvencies, whereas the transfers with which TUPE will most be commonly concerned will be those effected by companies. The ‘analogous insolvency proceedings’ to which the rest of regulation 8(7) refers could, therefore, on one view, be read as referring exclusively to insolvency proceedings of a type strictly analogous to ‘bankruptcy proceedings’, namely proceedings for the winding up of insolvent companies or other legal entities (limited liability partnerships, for example). Alternatively, if ‘bankruptcy’ is read as implicitly embracing a corporate winding up, then the ‘analogous insolvency proceedings’ must be language directed at casting the net wider so as to catch insolvency proceedings other than those directed exclusively at the winding up of the affairs of an insolvent individual, company or other entity. It may, on that basis, be intended to embrace an insolvency regime such as administration, although it will only do so if the proceedings instituted by an administration appointment can fairly be regarded as having been ‘instituted with a view to the liquidation of the assets of the transferor …’.

“Having made such points, I recognise that their making was probably substantially pointless. If it were to be viewed and interpreted exclusively as a piece of domestic drafting, regulation 8(7) would pose questions of interpretation that would be sufficiently challenging to lead to despondency if not despair. Since, however, it is manifest that the draftsman has sought by regulation 8(7) to do no more than to give domestic effect to article 5.1 of the 2001 Directive, whatever that may mean, it is the interpretation of article 5.1 that must be the focus of inquiry. Article 5.1 performed the unusual function of codifying that which the Court of Justice, in its various decisions from Abels to Europièces, had explained as the limit of [Council Directive 77/187/EEC].”

One wonders if the judge had had a hard day – If it were to be viewed and interpreted exclusively as a piece of domestic drafting, regulation 8(7) would pose questions of interpretation that would be sufficiently challenging to lead to despondency if not despair. I am sure the Court was delighted to be able to refer to the Directive, rather than face despondency and despair!

“At all times during my first year as manager, I strived to show players respect and in return would have hoped they would have shown me, and more importantly the club, respect by notifying us of their intentions before making it known elsewhere.

The players agreed to accept wage cuts for three months. That seems to be showing a certain amount of respect to the club, doesn’t it? Players could have refused to accept wage cuts and treated that as a breach of contract entitling them to leave. Bearing in mind the financial sacrifices the players made, and indeed noting that Mr Aluko effectively paid his own release fee to be able to sign for Rangers, it seems rather unfair of Mr McCoist to be criticising the players. Indeed if Sevco and Duff & Phelps have failed, as seems to be the case, to fulfil their statutory requirements prior to a TUPE transfer, then the former and putative future employers have failed to show “respect” to the players. In addition, is threatening players, incorrectly, as Mr Green did with being in breach of contract “respectful”?

Ally McCoist feels that players are not showing him and the club respect

“Players have their own decisions to make and I understand that, but the question they have to ask themselves is do they want to play for Rangers or not?

That is one question. The players are also entitled to ask what division they will be playing football in. Indeed they are entitled to ask if the y will be playing football at all! If Rangers are either barred from football for a year, or are unable to achieve entry to any league for the coming season, there is an argument that any players who are under contract to Sevco would be able to treat their contracts as “frustrated”. This means that, due to outside causes, the contract cannot be performed. After all, if you have a contract to play professional football, and your employer is not allowed to play professional football, how can the player perform the contract?

I wonder what Mr McCoist would have said if this had happened to him as a player…

“The formation of a new company is not the issue. The players would be playing for the same club – Rangers – in front of the same fans.

But they would have a new employer, with no track record and, by all accounts, already with money problems, and an uncertain future! On the other hand, a player can “walk away” and sign, registration permitting, as a free agent. From a financial point of view, if there is any demand for players, it would be laudable/foolish/quixotic (delete as appropriate) to transfer over.

“If players want to leave and play somewhere else then they should be honest with the Rangers supporters. I don’t want Rangers fans to be reading over the next few days how devastated players are about having to go. The fans deserve better than that. They are not daft.

Has Mr McCoist forgotten that the players waived substantial sums due to then by way of wages. Indeed these sums were not deferred, but have been given up by the players. Mr McCoist too will have made financial sacrifices I am sure, but it seems unfair to his players to be making public comments like this, and suggesting that players cannot be devastated to leave, if they feel they have to.

If players are employed by Sevco and that company runs out of money in October, for example (and this is a hypothetical situation) who will pay the players for their financial sacrifice then? If Rangers FC is barred for a year from playing football, or expelled from the SFA, who will pay the players? Will Mr Green and his investors pay over and above their limited corporate liability? Of course not.

“I can understand if a player has the chance to go somewhere else and there is uncertainty about which division we will be playing in. If that is the case that is understandable but they should not expect sympathy from Rangers supporters if they use the transfer of contracts as an excuse.

Mr McCoist is well aware of how the media works. He knows how statements are passed on and how these are taken by the audience to whom they are addressed. His comments here must therefore be accidental in their effects as it would be wrong for him to make them deliberately. He will be taken by the Rangers fans, or by some of them anyway, as giving them carte blanche to criticise a player who, in the interests of themselves and their family, leaves for financial security. What reaction would such a player get if playing against a “Rangers” team in the future? Thanks for all the hard work and sacrifice before – or a “lack of sympathy”?

These players are not using transfer of contracts as an “excuse”. Any player leaving will be doing so for their own financial interest, and as a result of the very uncertainty that Mr McCoist acknowledges himself!

“I already know there are agents touting my players all over the United Kingdom, so let’s be brutally honest.

That would be agents doing their jobs for the players. I would imagine that Sevco Rangers have been looking to see if they can sell any of their players too. Mr Green needs money into the coffers, and selling players is one way of doing so. Did Mr McCoist ever have his agent, when he played, investigate possible moves for him?

“We are in a difficult situation and the contracts issue has given some players and agents the belief they can use it to leave the club.

It is the law, and the transfer of the assets and business to a new company which have given the players the right to leave. Mr McCoist seems to suggest somehow that this is some loophole or scam. It is not.

“After all that the club and the fans have gone through, the supporters, above all, deserve the truth and should not have to listen to stories trying to sugar-coat the possible departure of players from the club.

OK. Let’s not sugar coat things.

As things stand, there is no certainty that “Rangers” will play football at all in the coming season.

There is no certainty what division and competitions it will play in if it does play.

There is no certainty that, even if it does play, the money will be there to see the team to the end of the season.

There is no certainty that Rangers will be able to keep all their players in the SFL, bearing in mind the SFL restrictions on player numbers.

“The players were magnificent last season and made great sacrifices and that will never be forgotten. Now, we have to look forward and everyone should be upfront and honest about their intentions.”

Nice of him to mention the players’ positives finally. Everyone should be upfront and honest? Maybe Mr Green should answer some questions then?

 

Rangers CEO Charles Green added: “We are meeting the PFA Scotland and their legal advisers on Monday with a view to allaying players’ concerns about the transfer of contracts so the timing of these announcements by players is hard to understand.

Last week Mr Green said the following:-

From the moment HMRC announced they wouldn’t support the CVA, we contacted the staff and had a meeting with them and the administrator made them aware.

“We as a newco started having discussions and as far as we are concerned, all the contracts transferred under TUPE.

“Of course, the difficulty is some of the players haven’t been around and the likes of Bocanegra have been away on international duty with the USA team.

“They’ve also been having holidays and taking their families away so it has been more difficult with the playing staff than the non-playing staff.

“We’ve been speaking to the PFA though and to individual agents and as the players come back next week, Alistair and I will be sitting down with them and explaining where we are.”

So he has acknowledged that he has not met with some of the players or their advisers, but he plans to do so. As mentioned above, TUPE exists to protect EMPLOYEES not EMPLOYERS. The players have the right to have statutory requirements fulfilled regarding consultation and information. The employers cannot say that as the employee was away, the transfer has happened.

Was it the players who made these announcements? Was the story found by an astute reporter? Did it come from within Ibrox? The coverage I have read does not make that clear.

“The transfer of contracts has already happened and the club’s clear legal advice is that players’ purported objection is ineffective. Rangers would like to make it abundantly clear to players, agents and the chairmen and managers of other football clubs that we will take whatever steps necessary to challenge what we regard as a breach of contract to protect the interests of our club.”

I am surprised, to say the least, by that legal advice. What does Mr Green envisage doing? Is Sevco going to interdict players from leaving, or sue them to implement contracts which do not exist? Will Sevco sue for damages? Will it ignore the clear legal position regarding player registrations? Whatever happens, does Mr Green seriously think he can use threats of court action to force players to play for Sevco Rangers?

Charles Green prepares to charm the chairmen of the SPL and SFL clubs.

Conclusion

I think that the legal position is clear. The players can object to a transfer of their employment to Sevco. If they do, they walk away from “Rangers” with no claim against them, and with the club having no claim on them.

Mr Green knows that his football team depends on the co-operation of other football teams, whether SPL or SFL, if it is to be allowed to play football anywhere next season. He also depends on the players being willing to forego their own financial interests for Sevco.

So how does he achieve this?

By threatening players and managers and chairmen of other teams! Brilliant!

I find much of this proves to be baffling. Mr McCoist’s announcements and those of Mr Green are bizarre, even by the standards of this mess to date.

Posted by Paul McConville

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119 Comments

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

119 responses to “Can Someone Offer Training on TUPE to Sevco, McCoist and Green?

  1. Ecojon

    @Martin – From memory one of the reasons that Tupe was introduced was because people selling companies were getting a better price through getting rid of employees, especially high wage earners, before the company was sold and I’m sure that Phoenix Companies operated the same way before Tupe protection.

    But I keep thinking a bit of the jigsaw is that oldco employees transfer to a newco with their old terms and conditions. But there is a narrow window of opportunity for the new employer to cut wages and conditions for economic, technical or organisational reasons. I think if Rangers were booted out the SPL and moved into a lower league – after players had accepted a transfer from the oldco – it would count as economic/organisational reasons.

    Greene could make the argument that this move was unexpected as he expected to continue in the SPL and if an Employment Tribunal accepted his argument he could cut player wages. So even if he was unable to sell them on to another club he would have them at a low salary. I just wonder if this is what Greene is playing for as he obviously regards his players as mere chattels to be used and abused as he determines. It means any player who wants to stay in Glasgow for family reasons and decides to go with Greene could have a very rude awakening in the near future when they end up playing in the Siberian Saltmines League LOL.

    I just wonder how long Coisty will last once he outlives his usefulness -1 nanosecond I reckon especially after his disloyalty to Greene when Walter came calling.

  2. Ken

    Charles Green says in his official statement
    “Our lawyers have written to the SFA today intimating that we do challenge the actions of the players and explaining why that is. They have also asked that the SFA confirm how it proposes to resolve the dispute between the players and Club”

    I am curious regarding appeal to SFA to adjudicate on this matter, given that Sevco – the company which Green claims holds title to said contracts – is not an SFA member!!
    I hope Mr. Regan is cognizant of that fact ………..

  3. NumbNuts

    Strikes me that the only benefactor of players being registered with NewCo RFC will be CG, who will promptly sell them on the grounds of ‘living within their means’, ‘surviving unfair penalties’, etc etc etc.

    If NewCo RFC legal advice is genuine then the next obvious question is to name the legal advisors in order to then confirm that they will put their name and reputation behind the interpretation suggested. If they will not then it is shown to be a complete wheeze, using the kind of bully boy tactics not seen since … well, a few short weeks ago with the demands to unmask the AT panel.

    Another unimpressive and undignified chapter for the history books.

  4. jocky bhoy

    I find this latest development from McCoist a) totally outrageous, b) slightly sinister and c) completely in character.

    Sone Aluko, as you point out Paul, paid for his own release fee, took a 75% wage cut (and I don’t imagine he’s on a huge salary in the first place) and who now doesn’t know the name of the team, he would play for, which division it would be in or who even who is backing it financially. No-one would accept transfer fo contract under those conditions. Aluko was one of What Was Rangers standout players H2 of last season, he’s earned the right to choose his destiny. I would suggest Sone Aluko has more dignity and integrity than all the rogues and miscreants that have sat behind manager’s or chairman’s desks at Ibrox since the turn of the century. (Paul Le Guen excepted)

    For McCoist to publicly criticise players, indeed to offer them as targets (hopefully for no more than verbal abuse, though we all know how the Rangers fans can react when offered a lightning rod for their frustrations) strikes me as ill-advised.

  5. Niall Walker

    I have this strange feeling that Ally may have indicated to Charles some time ago, that all players would transfer over to the newco, it would explain his rather inept response.

  6. Pingback: TUPE Regulations when a Company is in Administration | Web.3D.Law

  7. Boss Hogg

    Could Rangers disappear altogether?

    Although not yet a certainty we must now consider a significant possibility that Rangers (the concept) might actually disappear altogether. Either not to be seen again or not to play football at Ibrox again.

    What are the factors informing such a possibility? Essentially the assets, investors, the market, unexpected adversity and the very limited appetite for the acquisition of the playing club.

    The investors are people unashamedly (and there is no investment reason that they should be ashamed) committed to the generating of a return on their investment. Charles Green may have a football pedigree of sorts but the financiers behind him have a pedigree of investment. That’s their business.

    The investors are now the legal owners of heritable assets once valued in excess of £100m. They reportedly acquired these assets for around £5.5m. If £100m seems an over valuation, £5.5 seems a smidge on the low side reflecting the baggage that came with it. The market value probably lies somewhere between the two.

    Mr Green argues that the adversities of his newco failing to gain admission to the SPL formed part of his contingency planning. That may well be the case. Whether that contingency planning extended as far as at least four years with no revenues from Europeans football, and at least three years with severely depleted domestic revenues through having to enter the SFL at Division III we do not know. Based on his quoted reactions to these unfolding threats we may speculate not. It seems quite clear from his threat of legal action to fight what is consistently described as players’ absolute right to object to TUPE proposals that this contingency did not form part of the planning. Combined, these adversities represent a substantial dilution of revenues in the business plan.

    It has been reported that Ibrox Stadium and the Albion Car Park are strategically located with excellent communications links and close proximity to existing and proposed retail and housing developments. The training ground is reported to be subject to planning restrictions and covenants which might well influence its ultimate value. These should not be regarded as immutable however. It is actually quite common in the murky world of planning for playing fields to become prime land for housing development.

    All things considered we have a collection of investors seeing plan A washed away by unexpected events. With little or no sentimental attachment to the assets how might we expect pure investors to react if the market offers them a plan B to redeploy the assets and turn a decent profit quickly? Put it another way: Why would they refuse if offered certain profit now when the alternative would be the extremely uncertain prospect of profit from Scottish footballing operations at some undefined point in future?

  8. Pingback: Rangers, Sevco and the Law – Threatened Court Actions – Sevco v the Players | Random Thoughts Re Scots Law by Paul McConville

  9. Pingback: Rangers, Sevco and the Law – Threatened Court Actions – Sevco v the Players | Random Thoughts Re Scots Law by Paul McConville

  10. “I think that the legal position is clear. The players can object to a transfer of their employment to Sevco.”

    I’d be interested to know if you think there is no prescription at all on when (that is, at what point in the process against the background of the particular circumstances) that objection has to be made. Regulation 4(7) of course contains none but might you not have to imply something? See http://www.hallidaycampbell.com/2012/06/rangers-is-it-all-in-timing.html

  11. Brian Jeffrey

    Bottom line here is that the restructuring/amalgamation of the leagues should stand or fall on its own merit. Attaching a condition to considering it which requires that Rangers are allowed to enter SFL1 is nothing short of bullying and gerymandering. It detrays a lack of any moral fibre and is corrupt flagrant in equal very good measure. Those who are proposing it should hang their heads in shame.

  12. Brian Jeffrey

    oops… posted on the wrong blog thread.

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