Sean Pong Tyres Limited v Barry Moore (debarred)

A transfer under Transfer of Undertakings (Protection of Employment) Regulations 2006 does not transfer liability for an employee’s pre-transfer constructive dismissal where that employee did not transfer and was not dismissed for a transfer-related reason.

Likewise, an employer’s primary liability to its employee for discrimination or harassment under the Equality Act 2010 remains connected with the employment relationship with that claimant. It does not transfer merely because the employment of an alleged individual discriminator transfers.

A late TUPE contention is a potential defence, not a jurisdictional objection to a properly constituted employment claim. It is subject to the ordinary amendment principles, including the nature and timing of the amendment and the balance of prejudice.

The Employment Tribunal upheld Mr Moore’s claims for constructive unfair dismissal, age and race discrimination, and harassment against his former employer. The claims arose from conduct by another employee, Mr Owusu. Mr Moore had resigned before an alleged later transfer of the business in which Mr Owusu transferred to Credential.

At the final hearing, the employer sought to amend its response and join Credential. It contended that its liabilities had transferred under Transfer of Undertakings (Protection of Employment) Regulations 2006. The Tribunal refused the application and awarded compensation.

The employer appealed, arguing that the TUPE issue concerned the correct liable party and should have been treated as jurisdictional. The claimant was debarred and did not participate in the appeal. The central issues were whether the liabilities transferred and, if not, whether the Tribunal had erred in refusing the amendment.

1. Appeal dismissed. The employer’s liability for constructive unfair dismissal could not have transferred. Mr Moore had resigned before the putative transfer, for reasons unconnected with it, and had never been employed by the proposed transferee. Under regulation 4, only the contracts and associated liabilities of employees employed immediately before transfer, and employees protected by regulation 7(1), transfer. Humphreys v Oxford University, [2000] ICR 405, confirmed that a constructive-dismissal remedy preserved against the transferor is not transferred.

2. The employer’s primary liability under sections 39 and 40 of the Equality Act 2010 also remained with it. Section 109 can make an employer answerable for conduct of its employee, and direct discrimination and harassment may require proof of an individual act with the relevant mental element. That does not make the employer’s statutory liability a liability under or in connection with the alleged tortfeasor’s employment contract for regulation 4(2)(a) purposes.

3. The liability was instead directly connected with the claimant’s employment relationship. The proposed transferee had never employed the claimant and could not, on the face of sections 39 and 40, be the employer against whom he brought the claim. This construction also accorded with regulation 4(2)(b), which concerns acts or omissions in relation to a transferring employee, rather than a non-transferring employee.

4. Doane v Wimbledon Football Club Ltd and ors was persuasive on the transfer of an employer’s purely vicarious tort liability for a transferring employee. It did not govern an employer’s distinct primary liability under the Equality Act 2010. The EAT also noted that, on the present understanding of Sunderland City Council v Brennan, an Equality Act tortfeasor has no contribution claim against the employer under the Civil Liability (Contribution) Act 1978.

5. Accordingly, any error in the amendment decision was immaterial. In any event, the Tribunal correctly applied the ordinary Selkent balancing exercise. The proposed amendment was a fundamental, very late defence which would have abandoned the final hearing and caused major delay. The TUPE point was not jurisdictional: the claim had been properly brought by an employee against her or his employer. The refusal was within the Tribunal’s case-management discretion.

• Employment Appeal Tribunal: dismissed the employer’s appeal: [2024] EAT 1.
• Employment Tribunal: by a judgment sent on 7 February 2022, refused the employer’s late amendment and joinder application, upheld the claimant’s claims, and awarded compensation.