The Employment Appeal Tribunal (EAT) has ruled, in Lom Management Limited v Sweeney, that the assignment of a pub lease, from one tenant to another, did not constitute a TUPE transfer, so as to transfer the employment of an employee of the pub from one tenant to another.

A tenant ran a bar in Glasgow under a commercial lease from a brewery.  The lease came to an end, and was awarded to a new tenant.  The Claimant, Ms Sweeney, an employee at the pub, was on holiday at the time and came home to find that she no longer had a job.  She brought a claim against the new tenant, arguing that her employment at the pub had transferred to the new tenant under TUPE.

The Employment Tribunal initially found her dismissal to be unfair, considering that the transfer of the lease was a “classic” TUPE scenario.  The Tribunal however had failed to consider whether or not there was an identifiable economic entity before the assignation of the lease, and if so what it was, and then gone on to consider whether or not that entity survived the transfer.  The Employment Appeal Tribunal therefore overturned the decision of the Tribunal.  It confirmed that whilst TUPE can apply where there is an assignation of a lease, it requires to be shown that there was an economic entity (i.e. an organised grouping of persons and assets enabling or facilitating the exercise of an economic activity in pursuit of a specific objective) before the assignation, which retained its identity afterwards. The only relevant fact found was that there was an assignation of a lease; that was insufficient of itself to establish that TUPE applied.

Impact for employers

  • This case is a useful reminder of the relevant questions that must be asked in determining whether or not a TUPE transfer has occurred, or is likely to occur.  It is not sufficient to simply assume that TUPE applies in a case which appears to be a “classic” scenario.  All of the necessary issues must be considered in each case, taking into consideration the particular facts of each case.
  • However, the case has been remitted to the Employment Tribunal to apply the proper test to the facts.  When the Tribunal does so, it is not guaranteed to come to a different conclusion: the transfer of a pub business pursuant to a transfer of a lease may still be a relevant transfer under TUPE.