The questions arose after a former pub operator had a referral rejected by the pubs code adjudicator (PCA) following the end of their agreements.
The case has prompted questions over whether operators can lose access to independent arbitration at the point disputes become financially clear.
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The former operator attempted to raise a formal dispute with the PCA shortly after exiting tied pub agreements earlier this year. However, the referral was rejected on jurisdictional grounds, with the PCA stating that only a “current or prospective tied pub tenant” can bring a formal dispute to arbitration.
The operator said the full financial impact of the issues only became clear after exit, once final settlement figures had been produced.
The concerns raised included reduced autonomy around pricing, product range and marketing activity, mandatory participation in centrally driven promotions, operational issues linked to EPOS systems and support, and difficulties progressing site specific initiatives due to infrastructure or approval processes.
The operator argued this potentially creates a “practical gap” in the operation of the code where issues arising during tenancy may no longer be eligible for independent review once agreements have ended.
Jurisdiction
In correspondence seen by The Morning Advertiser (MA), the PCA confirmed the referral could not proceed because the individual was no longer a tied pub tenant at the point of referral.
The PCA said: “Under the pubs code legislation, only a tied pub tenant can bring a formal dispute to the PCA for arbitration. This means a current or prospective tenant of a tied pub.
“However, the PCA welcomes intelligence from former tied tenants about how the Pubs Code is operating and any compliance concerns relating to the regulated pub-owning businesses.”
Pubs Code Adjudicator
In further correspondence, the PCA stated that the definition of a tied pub tenant under section 70 of the Small Business, Enterprise and Employment Act 2015 “explicitly does not include a person who was previously a tied pub tenant”.
The matter has since been raised with an MP, who is understood to be seeking clarification from the Department for Business and Trade regarding whether this creates a gap in the practical operation of the code.
Industry response
A spokesperson for the British Beer & Pub Association (BBPA) said the issue did not appear to be widespread.
“In the ten years since the code has been in place, we’re not aware of this being a significant issue,” the spokesperson said.
“Our members have fully engaged with the pubs code and PCA and have helped create significant safeguards for tenants, proven in the high satisfaction ratings the majority have with their agreement.
“The pubs code has played a positive role in the evolution of the sector, but the industry has moved on considerably since its implementation.
“With strong relationships and professional partnerships now embedded, it’s time for a lighter touch, proportionate, risk based approach that will help us deliver Government’s mission to cut red tape and support growth and investment in local pubs.”
Marston’s said its operating models and levels of central support were clearly defined from the outset of agreements.
A spokesperson for Marston’s said: “We offer a range of clearly defined operating agreement types across our estate, each designed to suit different operator preferences and risk appetites, which are clearly explained upfront before any agreement is entered into.
“Some agreements provide greater autonomy, while others, such as our Partnership model, involve more central support and direction in areas like pricing, promotions and product range.
“In return, Partnership operators benefit from significantly reduced risk, with Marston’s responsible for many of their major outgoings such as utilities and business rates.
“All our partners are supported by dedicated Area Operations Managers, our central Pub Support Centre team, and specialist IT and EPOS helpdesks, with clear escalation routes in place should issues arise.
“The pubs code applies to current tied pub tenants. Where an operator has exited their agreement, they are no longer within scope of the code. While we can’t comment on any individual circumstances, we remain committed to operating transparently, supporting our partners and working constructively to resolve concerns wherever possible.”
