A TUPE update: when does liability for harassment transfer?

Where the alleged perpetrator of harassment transfers under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006), but the employee who alleges the harassment does not, does the liability for the harassment transfer from the original transferor to the transferee employer? No, held the EAT, liability under the Equality Act 2010 (EqA) does not transfer unless the claimant also transfers.

It is rare that we write with updates related to TUPE. Cases are few and far between, so when an update does come along it somewhat commands the attention of us employment lawyers, as was the case for us when judgment was handed down in the case of Sean Pong Tyres Limited v Mr Barry Moore (debarred).

It is well established under TUPE that the transferee (the buyer) effectively steps into the transferor’s (the seller’s) shoes with regards to transferring employees upon the transfer. As a result, all of the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts pass to the transferee (and any acts or omissions of the transferor before the transfer are treated as having been done by the transferee (regulation 4(2), TUPE)).

However, in the recent case of Sean Pong Tyres Limited v Barry Moore (debarred), the Employment Appeal Tribunal (EAT) held that when a claimant did not transfer in a TUPE transfer, liability for harassment and unfair dismissal did not pass to the new employer, even where the perpetrator transferred under TUPE.

Summary of case facts

• Mr Barry Moore, the Claimant, resigned from the Respondent, Sean Pong Tyres in April 2021.
• In June 2021, Mr Moore filed a claim against Sean Pong Tyres for:
• • Harassment and discrimination under the Equality Act 2010, perpetrated by another employee, and
  • Constructive unfair dismissal under the Employment Rights Act 1996.
• Mr Moore's claim specifically targeted Sean Pong Tyres, rather than the alleged perpetrator.
• In July 2021, the alleged perpetrator transferred to another company, Credential, which Sean Pong Tyres later tried to argue (on the first day of a three-day final hearing, after the Claimant had given evidence) was a TUPE transfer.
• Sean Pong Tyres then sought to make an application to amend their response and argue that liability for the claims had transferred to Credential (and to add Credential to the proceedings).
• The Employment Tribunal refused the application to amend, a key consideration being the balance of prejudice to the parties (being in favour or Mr Moore) and upheld Mr Moore’s claims.
• Sean Pong Tyres then appealed to the EAT; Mr Moore did not respond to the appeal and thus was debarred from further participation.

Decision

The EAT dismissed the appeal. Judge Stout held that:

• Liability under the EqA 2010 would not pass to a transferee under these circumstances (ie where the claimant does not also transfer). The fact that the alleged perpetrator had transferred to a new employer did not change this position; and
• There was also no transfer of liability under TUPE. The Claimant had resigned well before the alleged TUPE transfer, and for reasons unconnected with it, and so his employment was at all times with the Respondent. Liability for the unfair dismissal claim lay properly, therefore, with the Respondent.

Conclusion

The above case provides a key insight into how a transferor’s employment duties and liabilities may (or may not) transfer during a TUPE transfer. It reiterates the importance of due diligence, ensuring that during the acquisition process both parties understand known risks and those potentially on the horizon.

Remarkably, despite it being a TUPE case, there is previous authority on the point, the case of Sohail v WFS Ground Handling Services Ltd and others, based on very similar facts (which indeed also went to the EAT) reached the same conclusion – for those TUPE enthusiasts that might want some extra reading!

For more information about what happens on a TUPE transfer, see our blog TUPE explained. 

With special thanks to Heeteshini Mohungroo, a current paralegal in the Employment team, for their help with this case update.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, February 2024