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Explained: Transferring player contracts under TUPE

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The “Transfer of Undertakings (Protection of Employment) Regulations 2006” or TUPE for short protects employees in instances of the business that they work for being sold to a new owner. TUPE grants employees the legal right to transfer their employment to the new employer on the same terms as their existing contract with their old employer. The new employer takes over the contract from the old employer and it is legally treated as if the original contract was made with the new employer.

To use an example from the current Rangers saga, Steven Whittaker signed a 5 year deal at £20,000 per week at the beginning of last season. He currently has 4 years left to run on that contract. If he had chosen to transfer over to NewCo Rangers then legally it would be treated as if he had signed that 5 year contract with the NewCo. He would have 4 years left to run and would still be paid £20,000 per week and have the exact same terms as he did at OldCo Rangers. His contract would be completely identical.

For the vast majority of employees, they will wish to transfer their contracts to the new employer as it avoids the prospect of unemployment for the employee.

However, TUPE does not force employees to transfer their contracts. Regulation 4, paragraph 7 of TUPE states:

“(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 tje transferee.”

Paragraphs 1 & 2 are the paragraphs which set out the transfer of the contract. The paragraph cited clearly states that if an employee doesn’t wish to transfer to the new employer, all he must do is tell either the transferor (in this case the soon-to-be-liquidated Rangers currently ran by Duff & Phelps) or the transferee (NewCo Rangers owned by Charles Green) that he objects to the transfer.

If an employee doesn’t wish to transfer his contract then he simply objects and TUPE, Regulation 4, paragraph 8 becomes applicable. It states that:

“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.”

In layman’s terms, the contract is ripped up and the employee becomes unemployed. There are no legal claims for compensation or unfair dismissal etc. to be pursued. All legal obligations for the employee and the employer are extinguished and both parties go their separate ways.

It all seems simple enough so where does the confusion arise from? Well, it seems to all originate from Charles Green who has repeatedly claimed that the players are not eligible to object to the transfer despite that clearly being contrary to the law.

Green claimed on 20th June that “We as a newco started having discussions and as far as we are concerned, all the contracts transferred under TUPE.”, then on 23rd of June he stated: “The transfer of contracts has already happened and the club’s clear legal advice is that players’ purported objection is ineffective.”

Green is of the opinion that all player contracts have been transferred and as such the players cannot object to the transfer. This is evidently wrong as shown by Regulation 4, paragraph 7 of TUPE which was quoted earlier. Futhermore, the employees must be consulted about transferring their contracts, it cannot be done without their knowledge and approval.

Steven Whittaker today claimed that since the end of the season, the only contact he has received from the club was a single e-mail last week . Steven Naismith clarified that he received an e-mail on Thursday, his representatives then met Charles Green on Friday and he subsequently decided to object to the transfer of his contract.

Both players tell the same story of a distinct lack of contract, both also state that the first contact they had with Charles Green via e-mail on Thursday 21st of June, a full day after Green claimed “as far as we are concerned, all the contracts transferred under TUPE.”

Green seems determined to ride roughshod over the parts of TUPE that he doesn’t like. Not content with seemingly breaching TUPE, Green went on to offer a threat to any player that wishes to object to the transfer of his contract:

“Rangers would like to make it abundantly clear to players, agents and the chairmen and managers of breach of contract to protect the interests of our club.

As previously quoted TUPE, Regulation 4, paragraph 8 clearly states that there is no breach of contract if an employee objects to the transfer of their contract.

Charles Green repeatedly made ludicrous statements in regard to HMRC and their rejection of the CVA, he has now done the same with TUPE and the transfer of player contracts. He is either woefully incompetent to be running a business as he doesn’t understand how HMRC operates or how TUPE operates and apparently has failed to sought expert advice on either situation or he is not being truthful in his statements to the media.

Regardless of Charles Green’s competence (or lack thereof), it doesn’t change the fact that the players are more than entitled to object to any transfer and there is absolutely nothing Charles Green can do to force them to transfer their contracts to his NewCo. All the bluster about protecting the interests of the club by pursuing the players for breach of contract is simply an attempt to scare the players into transferring over. It is morally reprehensible and should be condemned.

So far Rhys McCabe, Sone Aluko, Steven Whittaker and Steven Naismith have all objected to transferring their contracts to Green’s NewCo. In the coming days several more players are expected to join suit and walk away from the NewCo & despite Green’s public utterances, there is nothing he
can do to stop them.

Written by Daniel Brown

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