ABC v Huntercombe (No.12) Limited & Ors

For liability to transfer under regulation 4(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, the connection between the liability and the transferred employment contract must be direct. A mere but-for connection is insufficient.

Vicarious liability owed by an employer to a third party for an employee’s tort is too remote. A related insurance indemnity may transfer where it arises from a liability that itself satisfies the direct-connection test.

The claimant sought damages for alleged torts and human-rights breaches suffered while she was an inpatient at a hospital operated by the first defendant. The hospital business was transferred to the second defendant, and the parties accepted that the Transfer of Undertakings (Protection of Employment) Regulations 2006 applied.

The court tried preliminary issues concerning whether regulation 4(2) transferred the first defendant’s alleged vicarious liability for employees’ torts, liability arising from alleged human-rights breaches, and any related right to indemnity under public-liability insurance.

1. Preliminary issues 1 and 2. The answer was no. Regulation 4(2) did not transfer the first defendant’s alleged vicarious liability for employees’ torts or the alleged liability arising from human-rights breaches.
2. The court applied the purposive interpretative approach described in Swift Trading v Robertson [2014] UKSC 50. Domestic legislation must, so far as possible, be interpreted in light of the wording and purpose of the Acquired Rights Directive.
3. The connection between the liability and the transferred contract must be direct. The liability must be one owed by the transferor to an employee. The fundamental employment duties considered in Martin v Lancashire County Council and Bernadone v Pall Mall Services Group Ltd and others [2001] ICR 197 satisfied that test.
4. Doane v Wimbledon FC [2007] 12 WLUK 2 was not followed. Its reliance on a but-for connection and on employee benefits did not properly apply the purposive approach or identify safeguarded employment rights. Sean Pong Tyres v Moore [2024] EAT 1 was preferred insofar as it required a direct connection.
5. Vicarious liability to an injured third party is secondary, no-fault liability and is not a fundamental obligation of the employment relationship. It was therefore too remote to transfer.
6. If the conclusions on preliminary issues 1 and 2 were wrong, the corresponding right to claim under insurance would also transfer. That conclusion was conditional and unnecessary to the result.

First-instance decision. No prior decision in the same proceedings was stated.