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29th June, 2012

In LOM Management Ltd v Sweeny [2010] UKEATS/0058/11/BI, the Employment Appeal Tribunal (“the EAT”) held that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) did not apply to an assignment of a lease and so an employee was not dismissed unfairly by the new tenant of the lease.

Miss Sweeny worked as a Duty Manager for her father at a bar of which he was a tenant.  The tenancy was assigned to LOM Management Ltd (“LOM”) whilst Miss Sweeny was on holiday and on her return Miss Sweeny discovered that she did not have a job.  She brought a claim against LOM that she had been unfairly dismissed by reason of a business transfer to which TUPE applied.

The Employment Tribunal in Glasgow held that TUPE did apply to the transfer between Miss Sweeny’s father and LOM since there had been an assignment of a lease of commercial premises and that the reason for Miss Sweeny’s dismissal was the transfer.  It therefore held that Miss Sweeny had been unfairly dismissed.

On appeal, the EAT disagreed with the Employment Tribunal.  It stated that although a TUPE transfer can apply to an assignment of a lease, it requires the existence of an economic entity before the assignment which retained its identity after the assignment.  An economic entity is defined in TUPE as “an organised grouping of resources which has the objective of pursuing an economic activity, whether or nor the activity is central or ancillary”.

The EAT held that the Employment Tribunal could not have concluded that there was an economic entity or that it transferred to LOM.  It held that Miss Sweeny failed to discharge the burden on her to establish that TUPE did apply and therefore upheld LOM’s appeal and dismissed Miss Sweeny’s claim.

Although in Miss Sweeny’s case TUPE did not apply on an assignment of a lease of a commercial property, it may apply if there is a business which also transfers satisfying the definition of an economic entity.

If you are currently transferring, or considering transferring, a business under TUPE, please do not hesitate to contact Helen Kidd in the Employment team with any queries at [email protected] or on 01244 405537.

 

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