Nicholas Siddall KC analyses the recent decision of the Court of Appeal in ABC-v-Huntercombe & Ors [2026] EWCA Civ 1161 and the guidance it provides as to the scope of the protection afforded to third parties under the TUPE Regulations 2006 (“TUPE”).
The Facts
The issue addressed in the appeal was pithily summarised by the Court of Appeal as this: “…whether an employer’s vicarious liability to a third party for the alleged torts of an employee passes to that employee’s new employer on transfer.”
The context of the issue was that the Claimant had been treated at a hospital operated by D1. During that treatment she claimed that she had faced treatment from the staff in the hospital such that it led to a psychiatric injury. Thereafter there had been a TUPE transfer of the operation of the hospital from D1 to D2. The Claimant initially issued proceedings against D1 and then discovered that D1 was in liquidation and that its insurance provision was such that her claim would be rendered valueless. Accordingly she sought to issue proceedings against D2 and allege that the liability of D1 to her for that injury had transferred to D2. At first instance the High Court (HHJ Bird) had concluded that the transfer did not serve to pass liability from D1 to D2 in this regard.
The Claimant appealed to the Court of Appeal.
The Court of Appeal’s statement of the correct starting point
The judgment of the Court was given by Coulson LJ. He was clear that one should not begin with the wording of the TUPE Regulations. Instead he stated:
“27. Starting with the Directive, not the Regulations, and ascertaining the purpose of the Directive, is therefore the appropriate first step in the analysis. It also has potentially significant consequences…
30. I have set out the relevant parts of the Directive at paragraphs 6 and 7 above. The key element of the preamble is its definition of its objective: “the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded.” Thus the primary purpose of the Directive is to ensure that the rights of employees are safeguarded in the event of a change of employer…
35. Having identified the primary purpose of the Directive, I turn to the Regulations in order to construe them in the way identified in Swift and Vodafone 2.”
Thus the key to unlocking the meaning of TUPE was to recognise that its aim was to safeguard the rights of employees.
No obvious discussion is seen in the judgment of the extent to which that analysis is (or may be) affected by Brexit.
The Court of Appeal’s Analysis
Having ascertained the purpose of the Directive Coulson LJ adopted a close analysis of the structure of TUPE. He made the following points:
(1) The key wording of Regulation 4(2)(a) TUPE was this:
“All the transferor’s…liabilities under or in connection with any such contract (of employment of any person employed by the transferor) shall be transferred…”
(2) Those words are potentially very wide. They refer to “all the transferor’s liabilities”, not just some. “Liabilities” is not expressly qualified in any way. Furthermore, it is all liabilities “under or in connection with” the contract of employment.
(4) The structure of TUPE was such that it was focussed on the rights of the employee as Regulations 5-6 are concerned with the effect of a relevant transfer on collective agreements and on trade union recognition. Regulation 7 is concerned with the dismissal of an employee because of a relevant transfer. Regulation 10 is concerned with pensions. It was stated that “[t]he entire focus of the Regulations is on the employee’s enforceable rights.”
(4) The purpose and objective of the Directive displays that Regulation 4(2)(a) does not extend to liabilities owed by the transferor to third parties.
“[51] …because the employer’s vicarious liability to a third party does not give rise to a right on the part of the employee under the contract of employment and forms no part of the employer’s protection of the employee under that contract, the transferor’s vicarious liability to a third party does not arise in connection with his or her contract of employment, and so does not pass under Regulation 4(2)(a).”
(5) Importance was attached to the fact that Regulation 11 sets out detailed requirements for the provision by the transferor of employee liability information. As a personal injury claim owed to a third party did not fall within that information this displayed that this was not a claim which would transfer. The court observed that “…Parliament intended that the transferee would know in advance about those claims for which they would be assuming liability, so they could act accordingly…If Parliament had intended that a transferee would be liable for third party claims for vicarious liability, the same or similar provisions to Regulations 11 and 12 would have been necessary in order to protect the transferee.”
(6) Indeed it was stated that it would be “blatantly unfair” for the transferee to face liability in this regard as it had no knowledge of the same and this was to be “…compared to the meticulous detail which the transferor has to provide about claims brought against it by its own employees.”
(7) Arguably new ground was broken in the resort to intuition when construing TUPE. It was said that “it is counter-intuitive to conclude that a third party can bring claims against the transferee, about events which happened before the transfer, and about which the transferee would know nothing and about which it would have no right to know anything…I consider that a third party’s ability to make a claim against a transferee with no relevant involvement in, or responsibility for, the actual events that gave rise to the claim, would need some clear permissive wording somewhere in the Directive or the Regulations, because it would otherwise be so at odds with ordinary legal principle. There is none, and no policy grounds which could begin to justify such an arbitrary outcome.”
(8) Bar the County Court decision in Doane this issue had not been litigated in 40 years and for the Claimant’s argument to succeed “one would have expected to see high authority in support of that principle, either from the CJEU, or from the domestic courts.”
(9) The decision in Baker-v-British Gas [2018] P.I.Q.R. P3 was consistent with the court’s analysis as “[t]his was a liability that the transferor had to the employee who was injured; the employee had a right to make the claim against the transferor, which right was protected/safeguarded by being transferred as a right to claim against the transferee. It was a liability and a right arising in connection with his contract of employment, and so was a liability that was transferred to the transferee.”
(10) There was nothing in the transfer of an insurance indemnity in Bernadone-v-Pall Mall [2001] ICR 197 as “if the claim was transferred, then so too were the means of enforcing it. The insurers were third parties to the contract of employment, but their involvement was triggered by the employee’s right to claim against the employer; unlike ABC, they were not third parties bringing a claim against the employer.”
The Court of Appeal’s decision
The court held that the vicarious liability to the Claimant did not transfer as a result of the relevant transfer. It stated that: “ABC cannot use provisions that were designed to safeguard the rights of employees to make a claim which would not otherwise be open to her, in circumstances where there are no relevant rights at all.”
The Limits of the Decision
This is a decision to be viewed in its context. Here a third party sought to ‘piggy back’ on a TUPE transfer in order to found a claim which would not otherwise exist. Indeed all parties conceded that on the facts of the matter “vicarious liability gives rise to no right that an employee could enforce against the transferor or transferee.” Further the Court of Appeal endorsed the submission that this was an “opportunistic claim”.
The Court also noted [47] “…I acknowledge that the protection of employees is also referred to in the Directive, and that that might be regarded as being potentially wider than the rights of employees, I do not see that it can make any difference in substance to the outcome of this issue.”
It might be observed that the analysis of the Court of Appeal is simplistic in some regards and it is not difficult to conceive of circumstances where the reasoning of the court might be tested. An obvious example might be the third party liability provisions within the Equality Act 2010 as regards harassment. However, and for present purposes, it is an authoritative statement of the extent of the protection provided by Regulation 4(2)(a) TUPE.
Nicholas Siddall KC regularly advises and appears for both employees and employers as regards the claims under TUPE.
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