TUPE – Temporary Cessation of Economic Activity


The Employment Appeal Tribunal (EAT) has ruled (Wood v London Colney Parish Council) that where the economic activity of a bar was temporarily suspended, owing to the loss of the premises licence, this did not prevent a relevant transfer for the purposes of Regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
Mr Wood was employed as a bar steward by a social club. He was the only employee and the licensee. He was dismissed after the club lost its premises licence and surrendered its lease to the owner of the premises, the London Colney Parish Council.
Shortly afterwards, the Council set up a new management committee and made an application for a new premises licence for the club. A personal licence was granted to one of the councillors and the bar was subsequently re-opened. No full-time bar steward was appointed, however, in order to save money.
Mr Wood claimed that there had been a relevant transfer for the purposes of TUPE and he had been unfairly dismissed.
By a majority, the Employment Tribunal held that there was no relevant transfer because the bar, an economic activity, did not retain its identity at the date of transfer because at that date an essential element of its operation – namely a premises licence – was missing.
On appeal, the EAT drew attention to the guidance given in the case of Cheeseman v Brewer, which was that ‘the decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity, as indicated, amongst other things, by the fact that its operation is actually continued or resumed’. In the EAT’s view, in this case there was a temporary cessation of the bar. It was clear that the Council intended to obtain a new premises licence and to re-open the bar itself, operating precisely as it had before. The economic entity did not therefore cease but was merely temporarily suspended until the bar was re-opened.
The case was remitted for further hearing on the merits of Mr Wood’s unfair dismissal claim.
If you are involved in a business transfer, always take timely advice to make sure you fully understand the legal implications. 

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