For a committed football fan such as this author, the mid-Summer (yes, apparently it is summer outside, though it is hard to tell through the rain) can be a depressing time. No more than a few days have passed since England’s usual exit from the last major footie tournament, but already fans are desperate for the new season to start.
The void is, however, being partly filled for some by tales surrounding the demise of Rangers FC. The Scottish club has, like few football clubs but many employers before it, got itself into some difficulty because of the Regulations governing employees’ positions in the event of a business transfer.
Having gone into administration following some tax goings-on probably best left unexplained here, and now facing liquidation, the Club is preparing to create a NewCo in order to gain readmission to the Scottish league, on other words, a clean new corporate entity freed from its debts and able to carry on the old feud with Celtic FC as if nothing had happened. The new owners, having paid a not insignificant sum, all things considered, for the assets (in this case, a stadium, training ground, staff and players, plan to transfer those assets into the NewCo, apply to be readmitted into the League, and start over. But there comes the hitch…
A number of the players, faced with the prospect of playing in a lower-standard league, have exercised their right under those Regulations to object to the transfer of their contract of employment to NewCo. This means that their employments are ended by the transfer and that they become free from extended-term contracts, free to negotiate moves to other Clubs, potentially improving their own earning capacity but also leaving the new owners of Rangers without several of their most valuable assets, both in financial and footballing terms. The first, Steven Naismith, has just been lured to Everton. Though there are issues in relation to his player registration which have led Rangers to cry foul, the short point is that his employment has unquestionably ended without any breach of contract by him. It is hard to see FIFA successfully pulling rank on the Transfer Regulations.
Whilst we can accept that the world of professional football is in many ways detached from the vagaries of everyday life at work, there is an important lesson here for all employers. When considering the purchase of another business, it is essential to ensure that you are going to retain the best talent, and have the benefit of their knowledge and expertise. If key people decide they want to move on, then it could scupper the buyer’s integration plans, and worse, its exit strategy of selling up for a profit. In addition, if an employee objects to the transfer, there will be no transfer of his contract, and so the buyer will not get the benefit of any restrictive covenants contained within it. Every employee is entitled to object to the transfer of their employment, so prospective buyers should make sure the key employees are not off-side and likely to walk away.
