One of the aims of the code is to strengthen the tied tenant’s hand in business negotiations with their pub company. Of course, both tenants and landlords have a shared interest in the recovery of the sector. But we are facing a period of extreme disruption in the industry and any weakness in the tenant’s negotiating position has the potential to be increased.
The principles of fairness and transparency which underpin the pubs code are more important than ever if tied tenants are not only to survive, but ultimately thrive.
So where are we likely to see tied tenants’ code rights making the biggest impact as they navigate their way through Covid-19 and beyond? Day to day it may be in the conversations taking place with the pub company representatives. We are now facing very different circumstances.
While all pubs were closed and the availability of Government grants was structured, the pubs code adjudicator (PCA) encouraged pub companies to be consistent about how they offered discretionary support.
With most pubs now trading, often in very different conditions, the support from pub companies (which still have a duty to apply fair principles) will likely become more business specific. The reality is that tenants will now be engaged in negotiating the best arrangements for their business. Knowing their code rights can help them here.
Tied tenants will be having conversations involving code rent events and repairs or negotiating over all of the many decisions that will be related to their recovery business planning, including discretionary support and related repayment plans for their no-fault debts during this ongoing trading uncertainty.
BDM and CCO positions
By law, the pub company must ensure the person engaging in those conversations on its behalf – whether that is the business development manager (BDM) or someone else – deals with the tied tenant in a fair and lawful manner. All discussions whether they take place in person or on the phone must be accurately recorded.
This is an important pubs code protection for the tenant if there is a dispute and encourages fair and code compliant interactions by the BDM. If the tenant thinks comments were made which were unfair or not recorded, a paper trail showing any dispute about what was said can be key to understanding if there are problems for the PCA to address.
Tenants can hold the pub company to account in this duty themselves, by ensuring that they object in writing to any omission or inaccuracy in the record of their one-to-one negotiations, as they have the right to do.
Each pub-owning business should have an internal procedure available to tenants for dealing with code breaches. It is the statutory responsibility of the code compliance officer (CCO) to verify its company’s compliance with the code and to be available to tenants to answer any related query. The CCO is independent of the BDM and can discuss compliance matters with them and with the tenant.
Where the tenant can’t get satisfaction, the pubs code gives them the right to request formal arbitration.
At this time I know tied pub tenants may be particularly sensitive to the costs and time involved in doing that so may want to take full advantage of the informal channels and engage with their trade association. Those associations can help collect valuable intelligence where there are repeat or systemic issues for me to consider as potential code breaches.
More information about the responsibilities relating to the BDM and the CCO can be found on my website – www.gov.uk/pca
Pubs code adjudicator Fiona Dickie will be speaking directly to the regulated industry by contributing a monthly column to The Morning Advertiser. Tell her if you would like her to discuss any particular topics at email@example.com