TUPE does not transfer liability for third-party claims, confirms High Court

ABC v Huntercombe (No.12) Ltd & Others – TUPE and Third-Party Claims

A recent High Court decision has confirmed that when employees transfer under TUPE, their employer’s liability for claims from third parties does not transfer with them.

The case involved a former hospital patient who brought a claim for damages. She alleged that two hospital employees had caused her harm and that the hospital was responsible for their actions. After the hospital was sold, those employees transferred to the new owner under TUPE. The key legal question was whether the new hospital owner became responsible for the patient’s claim.

The Court ruled that the liability remained with the previous hospital owner. TUPE is designed to protect the rights of employees when a business changes hands – not the rights of third parties, such as patients or customers. Because the claim was made by a non-employee, it did not transfer under TUPE.

This ruling confirms a clear distinction:

• If an employee has a claim (for example, discrimination or personal injury), that liability would usually transfer under TUPE.

• But if someone outside the business, like a client or patient, brings a claim based on an employee’s actions, that liability stays with the old employer.

The case is a useful reminder for employers involved in buying or selling a business – or outsourcing services – to:

• Check carefully which liabilities are likely to transfer

• Review relevant insurance cover

• Seek indemnity protection where needed

Need help with TUPE?

If you need advice or support with any aspect of TUPE, including business transfers, outsourcing, or employee liabilities, please feel free to contact our expert Employment Law team at mlplaw. We’re here to help you navigate the process with clarity and confidence.