Victoria Heyworth and Jasmine Chan appear in the Court of Appeal in a significant decision on the effect of TUPE Regulations

Victoria Heyworth and Jasmine Chan represented two Respondent clinicians in the Court of Appeal case of ABC v Huntercombe [2026] EWCA Civ 1161, in which judgment was handed down yesterday.  The issue was whether an employer’s vicarious liability to a third party, for the alleged torts of an employee, passes to a new employer on transfer under the TUPE 2006 Regulations.

In these proceedings, the Appellant claims damages arising out of her placement at Huntercombe Hospital in Maidenhead.  Huntercombe Hospital was a privately run psychiatric facility, previously owned and operated by the Huntercombe Group. In around March 2021, there was a transfer under the TUPE 2006 Regulations from Huntercombe to Active Young People Limited.

The Appellant brings an action in tort for damages arising out of the care provided to her before the date of the transfer.

The appeal turned on the interpretation of Regulation 4(2)(a) of the TUPE Regulations, which provides that, when a relevant TUPE transfer of an employment contract occurs, “all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee”.

It has long been established that this Regulation has the effect of transferring tortious liabilities owed to transferred employees, from the old employer to the new employer.  In Bernadone v Pall Mall Services Group [2001] ICR 197 the Court of Appeal held that a liability owed by an employer to an employee in tort was a liability which arose “in connection with” an employment contract.  As a result, the new transferee employer was liable to the employee instead of the former employer.

The Appellant sought to argue that the effect of the Regulation was to transfer the liability owed to her from Huntercombe to Active Young People Ltd, as a third party rather than as an employee.

That argument was rejected by HHJ Bird (sitting as a High Court Judge) at a preliminary trial of this issue in April 2025, and the Appellant duly appealed that decision to the Court of Appeal.  Her appeal was heard by the Court of Appeal (Bean LJ, Coulson LJ, Sir Launcelot Henderson) on 22 July 2026.

There was no previous binding authority on this point.  The Court of Appeal considered the legal framework to the TUPE Regulations and previously decided cases on the effect of Regulation 4.

In determining the proper construction of the TUPE Regulations, the Court of Appeal (Coulson LJ giving the leading judgment) recognised that the words in Regulation 4 were “potentially very wide” (paragraph 37) but that they did not mean that vicarious liability to third parties would transfer (paragraph 42):

1. The purpose of the Acquired Rights Directive (from which the TUPE Regulations were derived) was to safeguard the rights of employees (paragraph 43);
2. The doctrine of vicarious liability gives no protection to employees in practice, and on the contrary it is the employer who has the right to seek an indemnity against the employee for any damages he is liable to pay as a consequence of his vicarious liability for that employee’s negligence (paragraph 46); the vicarious liability of an employer is a legal construct which may sometimes assist a third party claimant, but has no substantive effect upon the position of the employee in question (paragraph 49);
3. 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 (paragraph 51);
4. By virtue of Regulations 11 and 12, Parliament intended that the transferee would know in advance about those claims made by employees for which they would be assuming liability, so they could act accordingly (paragraph 52); there is nothing in the Regulations which addresses third party claims and such information would have been included in Regulations 11 and 12 had it been Parliament’s intention that a transferee would be liable for third party claims for vicarious liability (paragraph 53);
5. 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 (paragraph 57).

For these reasons, it was held that HHJ Bird’s decision was correct.  The liabilities referred to in Regulation 4(2)(a) do not extend to the transferor’s vicarious liability to third parties for the acts and omissions of employees prior to transfer.  The appeal was accordingly dismissed.

The judgment can be found here: https://www.bailii.org/ew/cases/EWCA/Civ/2026/1161.html

BBC news coverage: https://www.bbc.co.uk/news/articles/cm2r1vz7kx5o