The Court of Appeal upheld a ruling that third-party claims remain with the original employer
The Court of Appeal has ruled that TUPE vicarious liability to a third party for an employee’s acts does not transfer to a new employer when an undertaking changes hands.
The decision came in ABC v Huntercombe (no.12) Limited & Ors [2026] EWCA Civ 1161, handed down on 8 September 2026. Lord Justice Coulson, Lord Justice Bean and Sir Launcelot Henderson dismissed ABC’s appeal and upheld the High Court’s decision.
The case concerned ABC’s claim arising from her placement at Huntercombe Hospital in Maidenhead. Huntercombe operated the hospital before the undertaking transferred to Active Young People Limited (AYPL) in around March 2021. Two doctors involved in ABC’s care had been employees of Huntercombe and subsequently became employees of AYPL.
ABC alleged that she had been mentally and verbally abused by staff during her four-month stay in 2018/2019 and said she had been restrained on more than 200 occasions. All the relevant events occurred before the transfer. The judgment also noted that more than 50 similar claims had been brought against the same parties.
The central issue was whether Regulation 4(2)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 transferred Huntercombe’s vicarious liability to AYPL.
The Court of Appeal held that it did not. Regulation 4(2)(a) provides for the transfer of the transferor’s liabilities “under or in connection with” an employee’s contract. Although those words are potentially wide, the court said they must be interpreted in light of the purpose of the Acquired Rights Directive from which TUPE derives.
The court emphasised that the Directive’s primary purpose is to safeguard employees’ rights when their employer changes. Vicarious liability, however, is a secondary liability owed by an employer to a third party and does not give the employee a right against the employer that can be transferred.
The judgment also distinguished claims brought by employees against their employer. Cases such as Baker v British Gas Services and Bernadone involved liabilities owed directly to employees and therefore fell within the TUPE transfer provisions. The court said that was materially different from a third party’s claim based on vicarious liability.
The court also relied on the wider TUPE scheme. Regulations 11 and 12 provide mechanisms concerning employee claims and information that must be supplied to a transferee. There are no equivalent provisions dealing with third-party claims for vicarious liability. The court considered that absence significant because a transferee could otherwise assume liabilities about which it had no entitlement to receive information.
The Court of Appeal therefore confirmed that the liabilities covered by Regulation 4(2)(a) do not extend to a transferor’s vicarious liability to third parties for employees’ acts or omissions occurring before the transfer. The appeal was dismissed.
For legal professionals dealing with TUPE transfers, the immediate point from the decision is that a third party cannot rely on Regulation 4(2)(a) to transfer the original employer’s pre-transfer vicarious liability to the transferee.