Legal Q&A: 2016 | Scottish Licensed Trade News

Scottish Licensed Trade News

Legal Q&A: 2016

Jack Cummins is one of Scotland’s leading licensing lawyers. Every month he writes on licensing law and answers readers’ questions in SLTN.

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Q: I have just taken over a pub. I was wondering if it’s legal to do alcohol loyalty cards/discount cards. I’ve seen these schemes operated elsewhere. Are they just ignoring the law?

A: In principle, there shouldn’t be a problem with a discount card scheme. The law in this area was settled a while back when a licensing board handed a warning to a pubco operating such a scheme for the student market. The licensing standards officer argued that dual pricing breached the ban on price variations lasting less than 72 hours. In his view, bar prices in the premises constantly fluctuated according to whether a drink was, or was not, purchased by a card holder. Following an appeal, the sheriff principal ruled in the licence holder’s favour. If the variation argument was sound, it would of course have prohibited other forms of differential pricing, such as might be operated in premises consisting of a lounge bar and a public bar. However, any operator considering such a scheme should take expert advice. The position in relation to loyalty cards is rather different and somewhat trickier. Again, proper advice is essential.

Q: I am an assistant manager of a hotel with a large restaurant and bar. We are owned by a large chain and keep getting told to try and cut wages. Although food and drink sales are in growth the hotel is not. Recently I have been manager, waiter and chef on the same shift because we are run so tight. I was wondering about the legal implications. How many employees should be in the building at one time during trading hours?

A: There’s no hard and fast rule, but it’s obvious that low staffing levels could easily result in the licence holders and the premises manager being unable to provide the quality of management and supervision that’s needed to ensure compliance with licensing, as well as health and safety legislation with unpalatable consequences.

Q: I work at a venue without a premises licence. However, we regularly hold drinks receptions and dinners at which alcohol and soft drinks are served.<br /> No money changes hands, but clients are invoiced for the alcohol on a consumption basis. Are we in breach of the regulations because we need a licence for this? My boss says that we don’t need a licence because there’s no cash bar.

A: Your boss is wrong. The supply of the alcohol results in a sale. It’s of no consequence that the sale is, in effect, made on credit. These events need an occasional licence. Unlicensed sales leading to a prosecution lead to a potential fine of up to £20,000 and/or six months’ imprisonment.

Q: When I was shopping at my local supermarket recently, the checkout operator handed me a voucher offering a 15 per cent discount if I visited the company’s website and spent at least £100 on alcohol. Is that promotion legal?

A: Drinks promotions are confined to an alcohol area approved by the licensing board (the displays in the body of the store and/or an “inaccessible area” such as a kiosk) or a separate room used for alcohol tastings.
However, in my view the promotion you describe is legal because the restrictions on in-store promotions are directed at “any activity which promotes, or seeks to promote, the buying of any alcohol sold on the premises for consumption off the premises” (with my emphasis and subject to a number of exceptions which aren’t relevant to this question).
In this case, those who take advantage of the promotion do so not in the store but on the website.
I suppose, at a stretch, it might be argued that the alcohol available to purchase on the website with a discount is also available for purchase “on the premises” (as might often be the case), but I very much doubt whether that interpretation of the Act would hold water.

Q: Sometimes I am asked to supply off-sales to my pub’s patrons at the end of the evening. They have started to complain that I am charging them on-sale prices for off-sales. I only have prices on display for on-sales, but am I obliged to charge a different, cheaper price for off-sales?

A: There’s absolutely no legal requirement to sell products more cheaply for off-consumption. If you do decide to operate two price lists (and that looks very unlikely), the rules regarding price variations apply to both. I’m assuming that your off-sales hours end at 10pm (the maximum possible terminal hour) so remember that off-sales can’t be taken from the premises after 10.15pm.

Q: The boss in my pub is planning the promotion of a particular brand of beer. He reckons that he can get round the ban on ‘buy one, get one free’ offers by giving a scratch card to customers buying this product with a free bottle as the prize. I’m pretty sure this is illegal. Am I correct? What are the possible consequences if he goes ahead?

A: The Licensing (Scotland) Act 2005 bans a promotion that offers alcohol as a “reward or prize” unless “the alcohol is in a sealed container and consumed off the premises”, so you’re quite correct: it is illegal if the free bottle is consumed on the premises. As to the consequences, the licence holder would be breaching a mandatory condition of the Act by carrying on an “irresponsible promotion”.  That amounts to a criminal offence, namely, the sale of alcohol except under and in accordance with a premises licence. A person convicted of that offence potentially faces a fine of up to £20,000, six months’ imprisonment or both, as well as a review of the premises licence. There’s also a risk that personal licence holders working on the premises could be reported to the licensing board by the chief constable for acting “in a manner which is inconsistent with any of the licensing objectives”.

Q: Our local bingo hall is going to give away a free drink, a glass of wine for one person or a bottle for two.<br /> Is this legal?

A: If the bingo hall has a premises licence authorising the sale of alcohol, what you describe is permissible, but only provided it’s not linked to the purchase of a drink (even a non-alcoholic drink).
On the other hand, if the premises isn’t licensed the supply of the wine would be an offence, even though it’s given away without payment.

Q: We have an off-sales licensed shop.<br /> We would like to offer a small selection of pre-packed dips and salsas to complement the wines.<br /> Can we sell these both as stand alone items or in hampers or gift combinations?

A: In the authorised alcohol area you can display a product other than alcohol if it is (a) a non-alcoholic drink; (b) packaged with, and may only be purchased along with, alcohol; (c) a branded non-alcoholic product; or (d) a newspaper, magazine or other publication.
Hampers and gift combinations would fall within category (b); but dips and salsa could not be displayed for individual sale.

Q: My pub is licensed until 2am. It’s our practice to call ‘last orders’ at 1.45 am.<br /> Can we sell alcohol after ‘last orders’ have been called if we wish to do so?

A: Yes, the pub may continue to sell alcohol right up until the end of licensed hours, and customers can then consume their purchases during the fifteen minute ‘drinking-up’ period that follows.
However, I reckon it’s not a great idea.
It puts pressure on customers to drink quickly and may generate complaints that there wasn’t enough time to finish their purchase.

Q: I’m a promoter for a nightclub. A rival has launched a promotion offering a free drink upon entry before a cut-off time. Looking at the banned “irresponsible promotions” in the Licensing (Scotland) Act 2005, it seems alcohol can’t be given away for free when there’s a condition that a drink is purchased. So, it’s legal to provide alcohol if there is no initial requirement to purchase a drink, just merely attend the venue before a certain time?

A: You’ve more or less answered your own question.  There’s no ban on the supply of free alcohol in the 2005 Act except in two situations, where: (1) an alcoholic drink is supplied free of charge or at a reduced price on the purchase of one or more drinks (whether or not alcoholic drinks); and (2) the purchase of one or more measures of an alcoholic drink leads to the supply of one or more extra measures free of charge or at a reduced price. So, as your research has revealed, the ban only operates where a purchase is involved. That said, there’s an outside possibility of a challenge on the basis that the promotion offers alcohol as “reward” for early entrance to the club – but regular readers will have gathered I reckon that view is totally unsupportable.

Q: When I was having a drink with friends recently in a branch of a well-known pub chain we were told by a member of staff that we weren’t allowed to take away an unfinished bottle of wine. Was that refusal legal?

A: Provided the pub’s premises licence authorises the sale of alcohol for consumption off the premises, the carry out would have been legal. So, either off-sales aren’t permitted or you ran foul of some management policy. For completeness, I ought to add that alcohol can’t be taken from licensed premises outwith licensed hours, unless: (a) it was sold during licensed hours; and (b) is taken away within 15 minutes of the end of licensed hours in a closed container.

Q: I am a member of a sports/social club. Like most private members’ clubs we really need new members in order to survive and the doors will close permanently within six months if we do not act now. In the past we have advertised functions locally with posters advertising tribute nights and so on. That got us a ‘rap on the knuckles’ from the licensing board as we were advertising functions to the general public instead of just to our own members. We have learned from this error. However, our options for bringing in new members through other avenues are now exhausted. I firmly believe that we need to advertise going forward. As a private members’ club can we advertise for new members and promote the facilities we offer?<br /> Can you help clarify what content we can advertise?

A: It’s not hard to see why the club ended up in hot water as a result of the previous advertising activity, but in my view there’s nothing to prevent a campaign to recruit new members which promotes the amenities the club has to offer. It might even say that the club has a licence authorising the supply of sale to members and their guests. However, before you embark on that course, it would be very wise to discuss the advertising content with one of the local licensing standards officers.
There is a more radical solution. The club could ‘go commercial’; that is to say, change the premises licence so that the club no longer operates under the present constraints.
That course would involve the loss of some dispensations, principally a higher annual fee and the requirement to have a premises manager who holds a personal licence. Before taking that step, the club needs proper legal advice. You’ve told me where the club premises are situated, so I know that the licensing board will in all probability need an application for a new licence, while other boards are content to allow the current licence to be varied.

Q: It’s now quite common for supermarkets to provide till-printed vouchers offering, for example £5 off a £35 shop. There’s absolutely nothing to prevent customers buying alcohol and achieving the discount. Is this legal?

A: I’m aware that this subject was raised at a local licensing forum meeting and the forum’s legal adviser opined – correctly, in my view – that these vouchers can’t be viewed as alcohol promotions. If the voucher is alcohol-specific we enter a whole new area. The legality of these vouchers is something of a minefield. When the Scottish Government published guidance on promo bans a few years ago it included a “frequently asked questions” section. The answers to several questions were left dangling in the air, including those relating to vouchers and “loyalty points” for alcohol purchases. In fact, the guidance suggests that it could be left to licensing boards and standards officers to take a view on whether a promotion was “irresponsible”.  This is an area which always calls for specialist advice.

Q: I work in a hotel where we sell wines by the bottle in our banqueting department. Are we able to sell the bottles at a set price all year round or do we need to sell the bottle by the measure prices we use in other parts of the hotel?

A: There’s nothing to prevent the operation of two price structures. The argument that alcohol pricing needs to be ‘linear’ now looks dead in the water. In other words, if a 250ml measure of wine costs, say, £8, a 750ml bottle needn’t be priced at £24. Similarly, there is no requirement to price a double measure of spirits at twice the cost of a single. However, a promotion is ‘irresponsible’ if it “encourages, or seeks to encourage, a person to buy or consume a larger measure of alcohol than the person had otherwise intended to buy or consume”.  That, of course, rules out active ‘up-selling’.

Q: We are a small members-only bowling club with a function area sometimes hired out to non-members. Is it illegal to operate two different price lists for alcohol sales based on member and non-member rates? The relevant prices are clearly displayed at the bar.

A: There’s no problem with dual pricing provided that each set of prices operates in accordance with the rules governing price variations. So, once the different price tariffs have been set, any change in either tariff must be introduced at the start of a period of licensed hours and for the following 72 hours no further variations are permitted. (For off-sales, the price freeze only affects the price of the product that has been varied.) There are of course rules regulating the supply of alcohol to non-members in certain types of clubs except when an occasional licence is in effect.

Q: I’m planning to take over a restaurant currently offering Indian cuisine. In the short term at least, I won’t be carrying out any alterations to the premises, but I will be converting the menu to Italian food and changing the name. Are there any licensing implications I need to consider?

A: You can change the trading name at minimal expense by means of a minor variation application. However, the switch to Italian food might require a major variation, depending on the description of the premises in the licence. If the description states the premises operates as an Indian restaurant then, unless you are dealing with a very pragmatic licensing board clerk, you’ll have to go through the much more expensive process. It’s always been my practice to frame descriptions as widely as possible to avoid this sort of trap. A few years ago, I came across a case in which premises were described in the licence as “next door to a Woolworths shop”. Believe it or not, when Woolworths closed that triggered the need for a major variation.

Q: If we have a function in our bowling club for members and guests only (no one under 18) and we don’t need an occasional licence for this function do we need to have a licence holder on the premises?

A: Assuming that the club has a constitution containing certain provisions as set out in regulations, there’s no requirement for alcohol sales to be authorised by the holder of a personal licence (no matter the ages of those admitted), but staff engaged to sell or serve alcohol must have undergone mandatory training.

Q:Recently clubs in the city where I work have developed new fad drinks. For example, one is built from shots of spirits, fruit juice and an RTD and supplied in a pint glass. They seem to be a quick way of getting drunk. How does the Licensing (Scotland) Act 2005 and subsequent legislation consider the legality of these drinks? Are they considered cocktails? What combinations will a customer request next and where does the line of responsible service end? I’ve been highly suspicious of the drinks for a while now, as the cynical side of me thinks they are an easy way to get round the singles and doubles restrictions of the Weights And Measures Act. Are licensing standards officers comfortable with these drinks being served?

A: In terms of weights and measures legislation, gin, whisky, rum and vodka must be dispensed in 25ml or 35ml measures or multiples thereof. But, as you seem to have gathered, where spirits are sold in a combination of three or more liquids (as in a cocktail) that requirement doesn’t apply. There’s nothing in the 2005 Act that would provide a basis for ruling these drinks illegal – leaving aside a ban on promotions based on the strength of any alcohol. As far as I know, these mixtures haven’t engaged the attention of standards officers – but if they do lead to drunkenness on the premises there’s plenty scope for enforcement action.

Q: I’ve just started up a new coffee shop with an alcohol licence and I’m trying to get established. One of the things a marketer has suggested is that we contact all the local businesses and offer them a complimentary glass of wine or beer as an enticement to come in to see us. I know there are some issues in Scotland with giving alcohol away as it’s not promoting responsible drinking. Any pointers you have would be appreciated.

A: The Licensing (Scotland) Act 2005 prohibits promotions involving the free supply of alcoholic drinks in two situations: where the supply of the drink is conditional on the purchase of (a) one or more other drinks (even a non-alcoholic drink) or (b) one or more measures of the drink. But there’s no outright ban, so that in my view what you propose is legal. Be aware, however, that you might conceivably encounter the argument that your idea would amount to an “irresponsible promotion” because it “offers alcohol as a reward or prize” for consumption on the premises: in other words, a ‘reward’ for visiting your premises. That interpretation is misguided. This veto is intended to prevent alcohol giveaways as a result of some ‘achievement’ or success in a competition, such as a pub quiz. In fact, the notes accompanying the 2005 Act make it clear that certain promotions were outlawed with a view to “reducing the problems of binge drinking”. In short, provided there’s no ‘catch’ attached to the glass of wine or beer, you should be in the clear.

Q: There’s a notice in the bar at my bowling club stating that alcohol sales are allowed during the period between 12pm until midnight, but regularly the bar gets closed between 5pm and 7pm without any prior notice to members. Can this be challenged?

A: There’s no licensing law remedy here: I can only suggest that you take up your grievance with the management committee.

Q: My students’ union operates both a members’ club and a pub. Staff refuse to accept a North American driver’s licence as proof-of-age and instead insist on a passport. They don’t require this during the tourist season. Are they taking the right approach? Are photocopy passports acceptable? It seems a bit risky to go out carrying a passport.

A: So far as driving licences are concerned, staff can only accept a European Union photocard licence. The other acceptable proof-of-age documents are: (a) a passport, but not a photocopy; (b) a Ministry of Defence identity card (“Form 90”); (c) a photographic “PASS card” with a hologram issued under the national Proof of Age Standards Scheme; (d) a national identity card issued by an EU member state (other than the UK), Norway, Iceland, Liechtenstein or Switzerland; or (e) a “biometric immigration document”.
The types that will in fact be accepted is a decision entirely within the licence holder’s discretion.
Although there seems to be no requirement for pub customers to produce a passport during the tourist season, there must be a “Challenge 25” policy in place so that the required steps are taken to establish the age of a person seeking to buy alcohol if it appears that the customer may be less than 25 years of age. Those steps must involve asking for sight of an acceptable document.

Q: If I run a drinks promotion over three days can I restrict it to specific hours, for example, between 7pm and 9pm on Fridays, Saturdays and Sundays?

A: No: a price variation can only be introduced at the beginning of a period of licensed hours with the result that prices are “locked” for the following 72 hours. The rules are slightly different for on and off-sales. For on-sales, that price freeze applies to the reduced product and any other alcohol sold in the premises. For off-sales, the restriction only affects the price of the product that has been varied.

Q: I am in the process of starting up a business selling jams infused with alcohol and I’m not completely sure on where I stand in terms of needing a licence or who I am able to sell my jam to. The jam will be around 3 to 4 per cent ABV and will contain various spirits like whisky and brandy. I have asked my local licensing standards officer who advised me that his interpretation of the law was that only alcohol sold in a liquid form required a licence and therefore I could sell my jam without one. He did however state that I should seek legal advice. So my questions are: do I need a licence to sell my jam product and am I able to sell it to those under the age of 18?

A: My inclination is to agree with the standards officer, who correctly points out that for licensing purposes (including the age-restriction) “alcohol” is a liquid. That rules out products made with alcohol which are “solid” (such as brandy butter) or do not flow freely at a constant volume. Your jam looks to fall into the latter category but given the consequences of unlicensed alcohol sales (see previous question) you should take a further opinion from a lawyer who can properly evaluate the product’s characteristics.

*Jack Cummins is unable to enter into personal correspondence on readers’ questions. The advice offered in SLTN is published for information only. No responsibility for loss occasioned by persons acting or refraining from action as a result of material contained on this page or elsewhere in SLTN can be accepted by the author or publisher.