TUPE and Rangers Newco: the right to object

United Kingdom
At this time of year, sports pages are normally rife with transfer speculation before the new domestic seasons begin across the UK. This summer is different however, due to increased interest in Glasgow Rangers and the effect of “TUPE transfers” of players to the Rangers Newco.

The financial difficulties of Rangers Football Club plc (“Rangers”), including the substantial claims made by HMRC, have been well publicised. Earlier this month the consortium headed by Charles Green claimed to have transferred the business and assets of Rangers into a new company, Sevco 5088 Ltd (“Sevco”). If the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) applied to this transaction, this would mean in broad terms that each employee working as part of the Rangers business would be transferred across to the employment of Sevco.

So far eight members of Rangers’ senior squad, unsettled by the uncertainty of which league their club will be playing in next season, have exercised their rights under Regulation 4 of TUPE. This part of TUPE essentially allows an employee to “opt-out” of the transfer to the new employer. The effect of such an objection is that the employee’s employment with his current employer terminates by operation of law with effect from the transfer date. The wording of TUPE points towards the objection needing to be made before the transfer takes place, but a High Court case in 2007 held that objections made after the date of the transfer can be valid in certain circumstances. Mr Green has labelled these opt-outs “opportunism” and is threatening to seek damages against the eight footballers for breach of contract, but at the moment the grounds of such a claim remain unclear.

It is relatively rare for employment law to play a big role in professional football – the common complaint from fans being that contracts appear not to be worth the paper they are written on. Nevertheless, Rangers fans will be finding themselves with a newfound interest in this particular legal issue.