Thursday, June 21, 2018
Innes Clark

Innes Clark

Employment Lawyer
Morton Fraser Solicitors 

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I was interviewed for Radio Clyde News this morning in respect of the fast moving developments at Rangers.

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.

Wednesday, 27 June 2012 15:13

Sick Employees & Annual Leave: Old News!

There has been a lot of coverage in the news over the past few days about the rights of workers who fall sick whilst on holiday from work.

The BBC and the Telegraph, amongst others, have reported on the European Court of Justice's ruling in relation to the case of ANGED v Federación de Asociaciones Sindicales and ors, in which it was held that a worker who is sick during annual leave is able to interrupt their leave and take it at a later date, irrespective of whether they fell sick before they went on leave or during their leave.

These reports suggest that this decision represents a significant change in the law, but regular readers of this blog will be aware that there have already been a number of decisions, both by the European courts and the Employment Tribunal in the UK, which touch on this subject. Indeed, I first reported on Pereda v Madrid Movilidad, the key case which influenced the ECJ's decision in ANGED, back in November 2009.

Furthermore, whilst the judgement in ANGED is binding on the UK, there had already been indications that the Employment Tribunal would take the same approach, such as in the case of Shah v First West Yorkshire Limited, which I covered at the start of 2010. In this case, the Tribunal stated that they were interpreting UK law so that it was "compatible with the underlying thrust of the legislation".

Whilst there is no doubt that the ruling in ANGED bolsters the interpretation of the principles set out in Pereda, I don't believe that this decision is as significant as the media suggests. ANGED does confirm that these rules also cover workers who fall sick whilst on leave as opposed to prior to it, which was not entirely clear from Pereda, but it has always seemed likely to me that this was the case (as can be seen in my blog on Shah).

So, all very interesting but it doesn't really change anything despite what the press are saying.

I noticed the following article in the Guardian over the weekend - No Fuss Sacking Payouts Included In Employment Law Overhaul. It is very much a case of watching this space and more information may be available later today. The key elements of this though, if the report correctly reflects the position, are:-
On my way to work this morning, I noticed an intriguing article in the Metro on the rise of the high-flying part time worker, which you can read for yourself on their website.

Whilst part-time workers have always been prevalent there has been a significant increase in the number of part-time workers at senior levels, with figures from the Office of National Statistics revealing that one in ten part-time staff earn over £40,000 per annum.

Despite this it seems that there is still considered to be a significant stigma towards part-time working particularly at a senior level. According to the survey by Timewise, nearly 40% of part-timers earning over £40,000 would 'never' refer to themselves as 'part-time', as they consider the term to have negative connotations. When earnings reach £75,000, the percentage shoots up to 67%.

As the Metro article rightly points out, part-time work is very often just as beneficial to employers as employees, allowing them to retain highly-valued team members who might otherwise have to leave the business, and reducing costs where there isn't sufficient need for a full-time member of staff at such a senior level. Similarly, by adopting a flexible attitude to work employers may well attract people that they would otherwise not.

With employees increasingly looking at flexibility in respect of the way that they work my own view is that it won't be too far into the future before the rigid 9am to 5pm, Monday to Friday working week becomes the exception rather than the norm.

Following my blog on the subject earlier this week, it has now been formally announced that amendments will be made to the Enterprise and Regulatory Reform Bill in order to increase the use of settlement agreements.

As I previously set out, the changes will ensure that employers can offer a settlement agreement to an employee before a formal dispute arises without the fact that the offer was made being used as evidence in a later Employment Tribunal (the fact that an offer to leave was made would be referred to by an ex-employee in evidence to attempt to argue that any subsequent dismissal to dismiss was already pre-determined). If the employee rejects the offer, their employment rights will continue to be protected.

One potential problem for employers at present is that if an employer is attempting to label a conversation "without prejudice" there needs to be a pre-existing dispute which, very often, there is not with the offer, from the employee's perspective, coming entirely out of the blue. That said, my own view is that, although this risk existed in theory, provided that the offer was worded in an appropriate way any risk was, in reality, minimal, in particular when made in the context of poor performance.

The Government's aim is to encourage more employers to consider early dispute resolution but whether this actually makes any difference in practice remains to be seen.

The Government have also indicated that they intend to publish standard settlement agreement forms for employers and employees to use. Many employers use compromise agreements at present although, as a safeguard to employees, these require to be signed by a solicitor (or other appropriate independent adviser) for them to be valid. It is not clear yet whether this important safeguard will remain or whether such an agreement will still be valid irrespective of whether the employee has obtained legal advice on its terms.

It also seems that the speculation that these changes were a compromise to the controversial compensated no-fault dismissal proposals may well have been accurate, with Vince Cable now providing a "categorical assurance" that the no-fault proposals will not be included in the Bill.

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