Living the dream? Part two

In the first part of this article, I considered the changes in the pub market over the past 20 years and the need for a mutually beneficial partnership between pub owners and publicans rather than the traditional arm’s length landlord and tenant relationship.

A successful tenant recognises the changing market and offers modern food and drink to a discerning market, supplied in attractive surroundings, promoted by social media. This also involves keeping on top of regulatory issues, which have an increasing impact on the running of any business. The consequences of non-compliance can be disastrous.

It takes only two failed test purchases in a three-month period to face potential prosecution for persistently serving alcohol to children. If taken to court, a business could face suspension of alcohol sales for up to three months and/or an unlimited fine. Practical tips include operating a ‘challenge 25 policy’, operating a ‘no ID no sale’ policy, use of a refusals book (to provide a record and evidence that a company has avoided the sale of alcohol to young people), staff training and displaying of statutory notices regarding the age limits of restricted products.

Breach of Health and Safety legislation which results in serious injury or death is a surefire way for a publican to wind up in court. Stonegate Pub Company Ltd, the fourth largest managed pub company in the UK, were recently prosecuted for health and safety breaches at the Slug and Lettuce in Colchester. The company was fined £100,000. The court heard how an employee, who was preparing to unload a drinks delivery on 18 October 2017, broke several fingers when an open but unsecured internal cellar hatch door fell back onto the employee’s hand.

In recent history publicans have found themselves before the courts for pest infestations, dirty premises, selling out of date food, preparing food with unhygienic utensils and the list goes on. It is vital that all food businesses as a bare minimum ensure they have the following:

• Good Food Safety Management System (FSMS)
• Structure is in good condition, ensuring no damages and in a good easily cleanable condition
• Good cleaning standards throughout
• Good supplier traceability
• Good traceability of products from delivery through to service, including temperature controls
• Good labelling
• Daily, weekly and monthly audits
• Pest preventative measures
• All staff are trained

Prosecution for offences under the Regulatory Reform (Fire Safety) Order 2005 are increasingly common. People visiting and staying at any premises must be kept safe. Therefore, public houses must conduct an appropriate fire risk assessment, and, any recommendations discovered from such a risk assessment should be implemented forthwith. Failure to conduct an adequate risk assessment, or heed the advice/warnings given by a regulatory body will almost certainly result in prosecution.

About 60% of all civil penalties for illegal working served in the UK were issued in the retail, hotel, restaurant and leisure industry sectors.  Employing a person who is disqualified from that work by reason of their immigration status in the UK is a crime. It is expected that revocation of a premises licence, even in the first instance should be seriously considered at a review hearing.

Employers can prevent the employment of illegal workers by carrying out simple checks to confirm a potential employee is entitled to work in the UK. These include obtaining original acceptable identification documents, checking that the documents are genuine and that the person presenting them is the prospective employee, the rightful holder and allowed to do the type of work you are offering. Lastly it is imperative to take a clear copy of each document in a format which cannot manually be altered and retain the copy securely either electronically or in hard copy.

Similarly, to the evolving relationship between the tenant and the landlord, the regulatory landscape is also one of change. This has particularly been the case since 1988 as pubs have had to quickly adapt to new legal implications of regulatory changes and market pressures. Pressure is also increasingly placed on pubs in regards to debt collection, as landlords and tenants have a fine line to navigate and one that will test the strongest of relationships. Communication is key for landlords and tenants as having good and open lines of communication can help minimise the risk of dispute. The second piece of practical advice is ensuring your contract is up to date and one that works for both parties. If tension begins to rise then seek legal help to smooth out any issues early on.

I have always wanted to own a pub but throughout the last 30 years my perspective on the sector has certainly changed. Those operating in the sector need to keep a closer eye on the regulatory framework than ever before, whilst balancing the need to adapt to new market pressures and navigating an increasingly complex relationship between the tenant and owner. If in doubt, seek answers from your legal adviser early on in the process to avoid being penalised down the line.

By Alan Hamblett, partner at debt recovery and asset finance solicitors, Corclaim