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Does liability for harassment transfer under TUPE? Not always, EAT finds

Anxious employee workplace harrassment

Sean Pong Tyres v Moore

It is a well-known principle of TUPE (the Transfer of Undertakings (Protection of Employment Regulations 2006) that, upon a relevant transfer, the transferee effectively steps into the transferor’s shoes in relation to transferring employees.

This means that all of the transferor’s “rights, powers, duties and liabilities under or in connection with” the transferring employees contracts pass to the transferee (regulation 4(2)(a), TUPE). As such, any acts or omissions committed by the transferor pre-transfer will be treated as an act or omission of the transferee.

However, interestingly, the case of Sean Pong Tyres v Moore found that this will not always be the case as the Employment Appeal Tribunal (EAT) held that liability for harassment did not transfer where the alleged harasser transferred to a new employer under TUPE (but the Claimant did not).

Facts of the case

The Claimant, Mr Barry Moore, resigned from Sean Pong Tyres (“SPT”) in April 2021. In June that year, he brought a claim against SPT alleging harassment and discrimination (committed by another employee) and constructive unfair dismissal. His claim was brought solely against SPT and did not include the employee who had allegedly harassed him as an additional Respondent to the claim.

In July 2021 the alleged harasser transferred from SPT to another company, Credential. SPT later argued (during the final hearing and after Mr Moore had already given evidence) that this amounted to a transfer pursuant to TUPE.

SPT then applied to amend its response to argue that liability for Mr Moore’s claims had transferred to Credential and to add Credential as a party to the proceedings. The Tribunal refused SPT’s application and upheld Mr Moore’s claims. When considering the application to amend, the Tribunal conducted a careful balancing exercise of all the relevant circumstances which included; the nature of the amendment, applicability of time limits, and the timing and manner of the application. The key consideration was the balance of prejudice to the parties, which the Tribunal found in favour of Mr Moore.

SPT appealed the Tribunal’s decision. Mr Moore did not respond to the appeal and was therefore debarred from further participation in the subsequent proceedings.

Employment Appeal Tribunal Decision

The EAT dismissed SPT’s appeal and found that liability for discrimination would not pass to a transferee (i.e. Credential) in these circumstances; that is, where the Claimant had not also transferred to the transferee.

In relation to the Claimant’s unfair dismissal claim there was also no transfer of liability under TUPE. The Claimant had resigned well before the alleged TUPE transfer, and for reasons that were not connected to it. The EAT found that, at all times, Mr Moore’s employment remained with SPL and therefore any rights and responsibilities of SPT towards the Claimant remained unchanged.

Key Takeaways

This case provides some helpful clarity regarding the circumstances in which a transferor’s duties and liabilities will pass to a transferee under a relevant TUPE transfer.

It also highlights the importance of carrying out thorough due diligence before any transfer takes place. This ensures that the parties on both sides of a transfer are clear about any risks which may lie ahead.

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