EAT Upholds Decision on TUPE Liability in Harassment and Constructive Dismissal Case

Citation: [2024] EAT 1
Judgment on

Introduction

In the case of Sean Pong Tyres Limited v Mr Barry Moore (debarred), the Employment Appeal Tribunal (EAT) examined an appeal against a decision by an Employment Tribunal (ET). The ET had upheld the claimant’s allegations of unfair constructive dismissal under the Employment Rights Act 1996 (ERA 1996) and harassment under the Equality Act 2010 (EA 2010). Critical to this case was the question of whether liability for these claims transferred to a new company under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) when the individual accused of harassment (but not the claimant) became employed by the new company.

Key Facts

The key facts of the case are as follows: the claimant, Mr Barry Moore, resigned from the appellant (Sean Pong Tyres Limited) and subsequently filed claims for unfair constructive dismissal and harassment, which were originally upheld by the ET. The appellant, at the beginning of the final hearing, sought to amend its response to introduce an argument that a TUPE transfer to a new company, Credential, shifted the liability for the claims. This amendment was refused by the ET, a decision subsequently challenged in the EAT.

Several legal principles underpinning the Employment Law played a pivotal role in this case:

  1. TUPE Regulations: The core legal question was whether a liability under the EA 2010 and ERA 1996 transfers to a new employer under TUPE when the alleged perpetrator of the harassment, but not the claimant, has transferred their employment.

  2. Employer’s Liability: The principles of vicarious liability, primary liability of an employer, and the distinction between these and third-party contractual liabilities were critical in determining whether such liabilities transfer under TUPE.

  3. Jurisdictional and Procedural considerations in Amendment Applications: The EAT had to determine whether the ET erred in treating the amendment application related to TUPE as a non-jurisdictional issue, and whether the principles for considering amendments were properly applied.

The judgment drew heavily upon precedent, including Humphreys v Oxford University and other cases such as Martin v Lancashire County Council and Doane v Wimbledon Football Club Ltd, to dissect the complexities involved in the interaction between TUPE and employer liabilities.

Outcomes

The EAT upheld the ruling of the ET on several fronts:

  1. It was determined that the liability under the EA 2010 and ERA 1996 for the claimant’s claims does not transfer to the new company under TUPE as the claimant’s employment had ceased well before the TUPE transfer, and the claims were unconnected to it.

  2. The decision in Doane v Wimbledon Football Club Ltd was considered but distinguished in its application to this case, leading to a nuanced view of how TUPE should interact with liabilities under the EA 2010.

  3. The EAT found the ET had not erred in its approach to the amendment application and appropriately considered where the balance of prejudice lay in relation to the potential defense versus the progression of the case.

Conclusion

The Sean Pong Tyres Limited v Mr Barry Moore (debarred) case presents a significant delineation of how TUPE regulations intersect with the liabilities arising from employment contracts and statutory duties to employees. The EAT decision reaffirms the principle that only the complex of rights and obligations connected with a transferring employee’s contract should move to the transferee, rather than with a non-transferring claimant employee. Moreover, it clarified how TUPE does not transfer an employer’s liability under the EA 2010 when the employee (claimant) has not been part of the transfer, upholding the ET’s original judgment and decision on the amendment application. This case highlights the importance of correctly identifying the party against whom a claim is brought and reaffirms the wide interpretative discretion afforded to tribunals in case management decisions, including amendment applications.