Matthew White KC has written this article to summarise what personal injury and clinical negligence practitioners need to know about the Court of Appeal decision in ABC v (1) Huntercombe (No.12) Ltd; (2) Active Young People Limited; (3) Dr Banisetti; & (4) Dr Tattersall [2026] EWCA Civ 1161

The Court of Appeal has upheld the decision below that when a business is transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006, whilst a transferring employer’s liability to its employees passes to the transferor (new) employer, any liabilities of the old employer to third parties based on the wrongs of the employees do not pass to the new employer. That is despite the regulations providing at r.4(2)(a) that “all the transferor’s… liabilities under or in connection with [a contract of employment] shall be transferred…”

C was a patient at D1’s hospital and alleged wrongdoing by employees of the hospital, including D3 and D4. After the alleged wrongdoing there was a transfer of D1’s undertaking to D2. D1 went into liquidation and, whilst insured, had an excess of £250,000 which would wipe out most if not all of the claim. C therefore pursued D2 (the new employer) and 2 alleged wrongdoers directly.

• C argued that vicarious liability transferred because the TUPE Regs transferred “liability… in connection with” the contract of employment. Anything for which an employer could be vicariously liable was of necessity connected with the employment [para 19-20].
• D2 (who did not want the liability to transfer to them) argued that the purpose of the Directive underpinning the Regs was to protect employees rather than others injured by employees, and the Regs should be construed in accordance with the purpose of the Directive [para 22-23].
• The Court of Appeal held that the purpose of the Directive was indeed to protect employees (only) [para 30-32].
• Having done so, the CA interpreted the Regs in accordance with that purpose, and found that whilst “all the transferor’s… liabilities under or in connection with [a contract of employment]” was very wide [para 37], nonetheless they should be construed as not transferring vicarious liability to third parties [para 42 & 58].
• That is, in effect, a finding that whilst the Regs say that they transfer “all” liabilities, they don’t.
• Amongst other reasons the court was also influenced by the fact that the TUPE Regs do not require the transferor to tell the transferee about possible third party claims based on vicarious liability [para 54].
• The CA were gently critical of the judge at first instance having referred to “a direct liability in the sense of being a liability the transferor has to an employee”, saying that “direct” may be imprecise and could lead to argument [para 73].
• The simple point is that liabilities referred to in the TUPE Regs do not extend to the transferor’s vicarious liability to third parties.

Personal Injury and Clinical Negligence practitioners need to know about this decision. It has potential to make life more complicated. It might mean a need to restore companies to the register. There is likely to be no point unless an insurer can be found. Whilst the Employers’ Liability Tracing Office might help with that, a large deductible might cause problems (as in this case).

For now, the key take home points are:

• It is worth checking the terms of any transfer to see whether more was transferred than is required by TUPE. If all that transferred is what was required by TUPE the following points apply.
• When the TUPE Regs say that “all” liabilities are transferred, they don’t mean it.
• In a case of vicarious liability followed by a TUPE transfer it is necessary for claimants to pursue the old employer and/or the wrongdoer(s) personally.
• Transferee entities can defend claims when a transferred employee injured a third party before the transfer on the basis that vicarious liability did not transfer with the employee.