Wednesday 6 June 2012

TUPE - Assignment of a Pub Lease

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

Can the assignment of a lease of commercial premises amount to a TUPE transfer?

Not unless it can be shown that there was concomitantly a transfer of an economic entity retaining its identity, says the EAT in LOM Management v Sweeney.

A tenant ran MacConnell's Bar in Glasgow under a commercial lease from a brewery. The lease was then assigned to a new tenant. The claimant was on holiday at the time of the assignment. On her return she discovered from the new tenant that she no longer had a job at the pub. The question was whether there had been a TUPE transfer automatically transferring her employment from the outgoing tenant to the incoming tenant. An employment tribunal found there was a TUPE transfer. In its opinion 'this was a classic transfer of undertakings situation'. It therefore found that the claimant had been automatically unfairly dismissed by the new tenant.

The EAT reversed this decision. Whist it is trite law that TUPE can apply where there has been an assignment of a lease of commercial property (see, for example Landsorganisationen i Danmark v Ny Molle Kro [1989] ICR 330), it must also be shown that there was a transfer of a business which was intrinsically liked to the property and satisfied the definition of an economic entity. In other words, it had to be shown there was an organised grouping of persons and assets facilitating the exercise of an economic activity which pursues a specific objective. In short, the assignment of a commercial lease does not of itself establish that TUPE applies.

The employment tribunal had failed to ask the relevant questions about whether there had been an economic entity retaining its identity and whether, if so, it had transferred to the new tenant, and its decision could not stand.

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