Rangers takeover: Rangers powerless to stop players leaving says expert
RANGERS players will be free to walk away from the club if it goes into liquidation, according to a leading expert on employment law.
• Fraser Wishart rejects Charles Green’s claim that players would breach contracts if they exercise right to leave Ibrox
• PFA believes players could leave for free; Wishart raises prospect of legal action if players prevented from leaving club
• Players becoming increasingly frustrated at uncertainty over futures
• PFA awaiting contact from Charles Green
They would also be free to accept offers to stay on at Ibrox under the new company which is set to take over Rangers but the choice would be theirs.
Last night, players’ union PFA Scotland issued a statement agreeing with the lawyer’s assessmentand protesting, on behalf of its members at Rangers, against the “information vacuum” at the Ibrox club.
PFA Scotland chief executive Fraser Wishart said that Charles Green, who heads the consortium aiming to take control of Rangers from administrators Duff & Phelps, had a legal obligation to consult the union about his plans.
Green said on Tuesday that players would be in breach of contract if they opted not to move to his “newco”. Arguing that Transfer of Undertakings (Protection of Employment) legislation, known as Tupe, compelled the players to move from the old company to the new, he said on the Rangers website: “Tupe is very clear and all employees will be transferred under the rules and regulations. We’ve explained to all the staff that contracts will be switched to the new company. If the players choose not to transfer they will then be in breach of contract.”
But yesterday Mark Hamilton, an employment partner and Tupe expert with law firm Maclay Murray & Spens, said the legislation made a specific exception in the event of insolvent liquidation. “The current Tupe Regulations, which became law in 2006, do say that, in general, employees’ contracts are automatically transferred when a company’s business is sold from administration.
“But the rules are different for liquidation. In that case, the key point is that employees do not transfer under the Regulations, though they are free to agree new contracts with the buyer of the business.
“Regulation 4 is the one which refers to contracts transferring under Tupe and this applies to administrations. However, Regulation 8 (7) says that this automatic transfer of employment contracts does not apply in the event of liquidation. Players and other employees can choose to move to the newco. But, if people do not want to go, they cannot be compelled.
“What happens is that, at the point when a liquidation commences, employment contracts are terminated. That does not mean they become null and void, because employees can still make claims on the company, such as for any wages due. But, from that point they are under no obligation to work for the liquidated company or any newco unless that is agreed.”
Wishart’s statement, posted on the PFA Scotland website, said: “The purpose of Tupe is to protect employees’ terms and conditions of employment in exactly this type of situation. Should the players wish to transfer across to the newco, Tupe ensures that they do so on their existing contractual terms.
“Equally Tupe affords every employee the statutory right to object to the transfer. Employers cannot select which parts of Tupe they wish to apply. If a player wishes to object to being transferred, his contract of employment would immediately come to an end, leaving him with no contract, no dismissal and no right to compensation from either oldco or newco. Both the club and the player are then free from their contractual obligations.
“With regard to the question of registration, we are unclear on what legal basis the football authorities would be entitled to withhold the transfer of registration of any player in this situation. The European Court of Justice ruling in the case of Bosman is authority for the view that professional footballers are workers like anyone else and are entitled to exercise their right to freedom of movement when out of contract.
“Our legal team considers that there are a number of legal remedies open to a player in the event of their registration being withheld, including the right to petition the Court of Session for a fast-track Judicial Review Hearing. It may well be the case that all of the players wish to transfer across to the newco, and if that is the case then PFA Scotland will ensure that their rights are protected. The players, however, are becoming increasingly unhappy at having to operate in an information vacuum whilst their futures are portrayed by others as being a fait accompli with no proper communication and consultation taking place.
“The players are being asked to decide upon their future with so many uncertainties involved. Unanswered questions such as which division the new club will actually play in, whether there be any sporting sanctions against the club, whether the club be eligible to play in the Scottish Cup and whether there will be a registration embargo. One or more of these factors may have an influence on a professional footballer’s career – particularly since it a career that is relatively short lived.
“Tupe also places a legal obligation on both the existing company and the newco to formally consult with the union/its members over a proposed transfer. Accordingly, PFA Scotland now looks forward to hearing from Mr Green and being furnished with information regarding the proposed transfer together with details of his plans for the future of the club.”
The status of players’ contracts at Rangers has been a matter of debate and disagreement since Craig Whyte took the club into administration on 14 February. But the regulations quoted by Hamilton appear to be decisive, and contradict what Green told Rangers staff on Tuesday.
He addressed Ibrox employees after Her Majesty’s Revenue & Customs decided it would not approve his proposed CVA route of administration. That decision by HMRC means that the CVA will be defeated at the creditors’ meeting today, and that the process of liquidation will then begin.
“Tupe regulations are very, very clear,” Green said on Tuesday evening. “We were notified by HMRC this morning and we immediately called a meeting of the staff. [The] newco will have Tupe regulations, and we would expect that all of the employees including the players would transfer into newco.
“While under Tupe regulations we are obliged to take up on all of the contracts, obviously someone may decide that they don’t want to be part of the newco. But at that point they would be in breach of contract.”
Yesterday Green continued his talks with the Scottish football authorities in a bid to secure a future for the newco. If that future is to be in the SPL he needs seven of the other 11 top-flight clubs to vote in favour of the newco receiving the share previously held by Rangers.
“We are still negotiating with the SFA and SPL to reach an amicable conclusion to the benefit of Scottish football,” he said outside Ibrox. “We need to carry on talking sensibly and get something that works for everyone.”
The liquidation process is expected to begin after two meetings at Ibrox today – the CVA meeting and a subsequent shareholders’ meeting, which Rangers have said will only last five minutes.
Duff & Phelps have said they have a binding agreement to sell Green the assets, such as Ibrox and Murray Park, and this would presumably happen before liquidation began.
After that, two liquidators from accountants BDO, who have been lined up at the behest of HMRC, will begin to wind up the existing company and seek ways of recovering cash for creditors. In a statement, joint-liquidator Malcolm Cohen said: “Once BDO is formally appointed, the joint liquidators will be seeking to protect any remaining assets, maximise recoveries for the benefit of creditors, and investigate the reasons behind the failure of the company.
“The joint administrators intend to complete a transfer of the business and assets to a new company in the coming days, putting the future of the club on more secure footing. Once this is done, BDO will determine what can be recovered from the remains of the existing company.
“It is right that there is a full and robust investigation into why the company failed, together with concerted efforts to recover monies for creditors and the taxpayer. This may include pursuit of possible claims against those responsible for the financial affairs of the company in previous years.”
Although Green now appears resigned to going down the newco route, there were suggestions in Glasgow last night that Rangers could issue a legal challenge to HMRC’s refusal to accept the CVA. The challenge would be made on the grounds that, by making that refusal, the tax authority had failed to secure the best possible deal for the taxpayer.
However, it is understood that HMRC has a caveat in place meaning they must be informed beforehand of legal action against them. Last night a spokesperson for HMRC said they had no knowledge of any such pending action.
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