Rangers F.C. & TUPE - can player exodus be stopped?

The current position is that 8 players have been reported as having objected to their contracts of employment transferring to the "new Rangers". Charles Green has apparently threatened to litigate any departing players given that, in his view, they are in breach of contract.

The gist of the reports that I have seen is that his position is that the players contracts of employment have already transferred to the new Rangers and that any attempt to object to transferring is too late. The players' position is that they are entitled to object in terms of the TUPE Regulations and that their contracts of employment have terminated and they are free agents.

It is obviously in the players interests to be free agents as this is likely to assist their bargaining position in any negotiations with any other football club that they might choose to join.

So who is right?

The TUPE Regulations protect an employee's continuity of employment in the event that a business is sold by one company to another as has effectively happened in the Rangers situation with the administrators selling the business and assets to Sevco 5088 Limited being the limited company set up by Charles Green's consortium.

However, in terms of Regulation 4(7) of TUPE it is possible for an employee to object to the transfer for any reason whatsoever. In such circumstances they do not transfer to the new organisation and their employment automatically comes to an end.

Regulation 4(7) is worded so that it refers to an individual indicating that he "objects to becoming employed" by the new company. Read literally this means that any objection would need to be made before the transfer takes place. This does not seem to have been the case here and based on press reports the business transfer took place on 14 June with the various objections coming through at some point after that date. Much has been made in the press and by Charles Green that this is too late and that the objection is not valid.

There are though in my view a couple of reasons why this is likely to be incorrect.

In the first instance there is at least one case (New ISG Limited v Vernon and Others) where objections in terms of Regulation 4(7) were held to be valid even though they took place 2 days after the transfer. This was on the basis that the employees concerned did not know the identity of the new employer until that point in time. The Judge made reference in his judgement to the fundamental right of an individual to be free to choose their employer.

Looking at the Rangers situation much would turn on what information the players (or those representing them, such as their agents) knew. If they knew prior to the transfer who their new employer was going to be then any objection in terms of Regulation 4(7) would likely be invalid.

However, if they did not know exactly who their employer was - and it may not be enough for them to have known that it was going to be something to do with Charles Green's consortium, arguably they would have needed to know the exact identity of the employer being, presumably, Sevco 5088 Limited. If they weren't aware of this before the transfer then an objection after the transfer may well still be valid.

Even if the players were unsuccessful on this point there is a further provision in terms of the TUPE Regulations - Regulation 4(9) which they may well be able to rely on.

One important aspect of an objection under Regulation 4(9) is that the wording is such that an objection can be made before OR after the transfer has taken place. Accordingly, the timing issue which Charles Green appears to be placing much emphasis on is less of an issue.

Regulation 4(9) does though only apply where the transfer "involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred".

It may well be possible for the players to argue that their situation meets this criteria if, for example, as seems highly likely, the new Rangers are not playing in the SPL next season but rather are playing one of the lower leagues. This loss of status and the knock on effect that it would presumably have for a player ( e.g. reduced sponsorship etc) could be used to argue that a Regulation 4(9) objection is valid.

Regulation 4(9) is sometimes referred to as a "quasi constructive dismissal claim". One interesting aspect of it though is that it does not require there to have been a breach of contract on the part of the employer. Accordingly, provided that the players can show that the transfer "involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred" then they should be in a position to validly object even if there was no actual breach of contract on the part of the employer.

It has been widely assumed in general legal commentary that a Regulation 4(9) objection allows the employee to walk away from the contract immediately but I have a nagging doubt that it may not be quite as simple as that albeit the Courts have still to determine the position.

The TUPE Regulations certainly envisage that the employee's contract of employment will terminate where there is a Regulation 4(9) objection. However, Regulation 4(10) specifically makes reference to the employee having no right to claim damages in the event that the employee has failed to work their notice.

The TUPE Regulations are though silent on the remedies open to the employer if the employee fails to work their notice. It might be one thing for an employee to object in terms of Regulation 4(9) but unless the situation amounts to a breach of contract which is sufficiently serious to amount to constructive dismissal it may still be possible for the new Rangers to argue that the players still owe the employer a contractual obligation to serve out their notice or, alternatively to pay them damages for breach of contract. I'm not convinced by this argument but it may be a possible line for the New Rangers to take.

A further possibility for the players though would be to argue constructive dismissal although this would only be possible if there has been a material breach of the contract of employment and the player resigned as a direct result of the breach rather than for some other reason. Again, depending on the circumstances this may be a route open to the players albeit it is not likely to be as straightforward as a Regulation 4(7) or 4(9) objection.

The situation is complicated slightly by the player registration system. However, in simple terms, provided that the contract has come to an end it is highly unlikely that a football club will be able to block a player registering with another club. This was the general premise of the famous Bosman ruling.

The situation is moving very quickly and it will be interesting to see how things pan out. Hopefully, a quick resolution can be agreed which would seem to be in all parties and, perhaps most importantly, the football fans' interests.