UK: EAT rules that employer's liability for discrimination transfers under TUPE only if the victim transfers

The Employment Appeal Tribunal has ruled that a transferee will not acquire liability for acts of harassment by an employee who transfers under TUPE unless the alleged victim’s contract of employment also transfers. In Sean Pong Tyres Ltd v Moore, the alleged victim had resigned well before the transfer and for reasons unconnected with it, so liability to that non-transferring employee remained with the transferor employer. 

The EAT distinguished an earlier case ruling that vicarious liability for the tortious actions of a transferring employee to a third party could transfer under TUPE.  In Sean Pong, the employer’s liability was primary liability for its own harassment (through the actions of employees), not vicarious liability, and this primary liability was a “liability under or in connection with” the non-transferring victim’s contract, not the transferring perpetrator’s contract.  The EAT considered that, in contrast to the position for negligence, the perpetrator could not claim a contribution from their employer in relation to their own personal liability for a harassment claim.  The perpetrator therefore had no rights against the employer, the transfer of which might have justified interpreting TUPE more widely. 

Of course, it remains best practice for transferees to carry out due diligence into potential claims and seek appropriate warranties and indemnities, not least as it appears vicarious liability for the negligent actions of a transferring employee could transfer, even if liability for their discriminatory acts does not (unless the victim also transfers).