The turmoil at Glasgow Rangers continues. We have seen over the weekend that two high profile first team players, Steven Naismith and Steven Whittaker have terminated their contracts with Glasgow Rangers.
Both players are in their peak of their career and would probably be valued in the marketplace at somewhere in the region of £3 million.
So what is the legal assessment and analysis?
The consortium led by Charles Green recently completed the acquisition from the liquidator of Glasgow Rangers assets. It is almost inevitable that the sale purchase agreement would include the acquisition of the players many of whom will have a good market value.
So what has happened here?
Both Naismith and Whittaker undoubtedly will have been approached by other clubs with it being reported that several premiership clubs would like to recruit these two players for the start of the new season. If these players are “free agents” then they become highly marketable and will be able to negotiate very good contracts. So instead of a transfer fee being paid, the acquiring club will be able to pay more to the players (and the agents) both in terms of remuneration and commissions.
The players have relied upon legislation known as TUPE.
What is TUPE?
TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981 but overhauled in 2006. TUPE is a significant and often tricky piece of legislation adopted by the UK in order to implement the European Acquired Rights Directive.
The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law.
However, on this occasion rather than give protection to the employees, the exact opposite has happened based on the following criteria: –
(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.
(9) Subject to regulation 9, where a relevant 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 under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer.
Accordingly the players rely upon the fact that they have informed the new company which has acquired the business that they object to becoming employed by them in accordance with Regulation 4 (7) and have also taken the view that working for the new Charles Green consortium would involve a substantial change in their working conditions to their detriment in accordance with Regulation 4 (9). The players will be able to argue that the status of Glasgow Rangers in terms of which division they are going to play in next season is a substantial change in working conditions.
The response from the Charles Green consortium is that the players will be pursued for damages for breach of contract and inducement to breach contract.
From the players’ perspective, they have an opportunity to secure their futures in what has been a very difficult few months for them. One would imagine that if and when they do move to another club, they will seek as part of their contract an indemnity to avoid having to pay damages. Any new club would want to carry out their own due diligence especially given the difficulties of understanding how the TUPE regulations work.
The new consortium at Glasgow Rangers will immediately be feeling twitchy. They have made and paid for an investment which could be immediately undermined especially if a whole host of other players feel they can leave the club unconditionally.
All in all, it could be an uncertain time for all concerned.
If I was a betting man, and based on the fact that players can legitimately create a very strong argument that their working conditions have deteriorated, it might be very difficult for the new “Glasgow Rangers” to succeed in claiming damages.