Wood v London Colney Parish Council
For the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE) to apply, there has to be an “economic entity which retains its identity”. In Wood v London Colney Parish Council, the Employment Appeal Tribunal (EAT) held that just because there had been a temporary cessation of business did not mean that the “economic entity” had ceased to exist.
Basic facts
As the freehold owner of a property called the Caledon Community Centre, the London Colney Parish Council had granted a 99-year lease to the London Colney Community Association (LCCA).
LCCA, in turn, sub-let parts of the centre to the Caledon social club, including two bars, a bar area and a kitchen and granted the social club a licence. In October 2005, Mr Wood was taken on as a bar steward by the club - he was their only employee and also the licensee.
In June 2008 the licence was withdrawn from the whole premises and in August the social club surrendered its lease and dismissed Mr Wood. On 16 September the club surrendered its licence to the parish council.
The parish council then made an application for a licence for the club area which was granted to Councillor Flynn, a member of the council, and the bar re-opened in October 2008. A second licence was granted to the council in November. Councillor Flynn ran the bar at the weekends using casual bar staff but no full time steward.
Mr Wood claimed that his employment had transferred over under regulation 3(1)(a) of TUPE and that he had been unfairly dismissed.
Relevant law
Regulation 3(1)(a) states that a relevant transfer is “a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity”.
Tribunal decision
The tribunal said that, if there had been a transfer, it took place on 16 September. It then said that although there was an economic entity before that date, it did not retain its identity at the date of the transfer because the club didn’t have a licence at that point. Accordingly, the majority held that there was no relevant transfer.
However, one member found that a relevant transfer had taken place, saying that the absence of a licence on the transfer date was irrelevant. She did not think it was important that there was a gap between the club shutting down in September and then reopening in October.
EAT decision
And the EAT agreed with her. It held that, on the facts found by the tribunal, there had been a temporary cessation of the bar operation at the centre. By 16 September, the parish council had decided to obtain a fresh premises licence certificate and to re-open the bar themselves, operating in exactly the same way as the Caledon social club had done.
The economic entity did not therefore cease on 16 September. Instead it had just been temporarily suspended until the bar re-opened in October when a personal licence was granted to Councillor Flynn.
The EAT therefore allowed the appeal and substituted a declaration that a relevant transfer for the purposes of regulation 3(1)(a) of TUPE 2006 took place from the social club to the parish council on 16 September. It remitted the matter to a tribunal to hear Mr Wood’s unfair dismissal claim.