Monthly Highlights – UK Employment Law – May 2025

In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers.

1. In ABC v Huntercombe (No 12) Ltd and others, the High Court held that when a business is transferred under the UK’s TUPE regulations, liability for wrongdoing by employees towards a third party before the transfer did not automatically transfer to the new employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 SI 2006/246.

   What led to the dispute, and why is the outcome significant for employers?

   • The claimant (“ABC”) was a patient at a hospital run by Huntercombe (the “Transferor”) and claimed to have suffered injuries due to actions by employees of the Transferor involved in a TUPE transfer.
   • Generally, employers are “vicariously” liable for torts, such as negligence, carried out by their employees during the course of their employment. Under TUPE (Regulation 4), all of the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employee’s contract pass to the transferee.
   • However, the High Court disagreed with a previous County Court decision in Doane v Wimbledon Football Club, where it was argued that vicarious liability did transfer under TUPE. The High Court stated that the County Court judge had misinterpreted the TUPE Regulations in this previous case.
   • The High Court considered that the TUPE Regulations exist to protect the rights of employees following a transfer. The obligations that transfer must be direct ones between the employee and employer, not responsibilities to third parties.
   • The Court determined that vicarious liability to non-employee third parties is too remote to transfer under TUPE and that liability remained with the former employer.

   Takeaways:

   • Liability under TUPE is limited to direct obligations between the employee and the employer.
   • Liabilities owed directly to an employee, such as those involving personal injury, discrimination or harassment, will transfer under TUPE.

2. In Fasano v Reckitt Benckiser Group plc and another, the Court of Appeal upheld the dismissal of an indirect age discrimination claim that was brought by a retired employee against his former employer and its parent company after beneficial changes to an employment incentive plan excluded employees who had already left employment.

   What led to the dispute, and why is the outcome significant for employers?

   • Under the Equality Act 2010, actions by an agent for an employer, with the employer’s authority, are treated as actions taken by the employer. However, the concept of agency has been developed through case law and there is no single accepted definition of agency.
   • Indirect discrimination occurs when a workplace practice, policy or rule (known as a "PCP") that applies to everyone disadvantages an individual because of a protected characteristic. Indirect discrimination can be justified if the employer can show the PCP is a proportionate means of achieving a legitimate business objective.
   • The Court of Appeal considered whether Reckitt Benckiser Group (“RB Group”) was acting on behalf of its subsidiary, RB Health, when it granted and later amended the terms of RB Group’s long-term incentive plan (LTIP). The claimant, a recently retired RB Health employee, claimed indirect discrimination because the changes excluded him from receiving an award.
   • RB Health could only be held liable for indirect discrimination if RB Group had acted as its agent in making those changes. The Court of Appeal dismissed the appeal and allowed the cross-appeal on the basis that RB Group was not acting as RB Health’s agent when changing the plan, and that the change was a proportionate means of achieving a legitimate aim.

   Takeaways:

   • Post-employment, the former subsidiary employer is not automatically liable for actions taken by the parent company.
   • Former employees may lack recourse under discrimination law if a parent company alters the terms of an incentive plan.
   • During employment, the situation is less clear. The Court of Appeal suggested that an employer might be liable for discrimination by a parent company (or another entity) during the course of an employee’s employment. However, the court did not give examples of when liability might occur, and it did not hear views from either side on this point as it did not arise in this case.

3. In Handa v Station Hotel (Newcastle) Ltd and others, the Employment Appeal Tribunal held that two HR consultants were not liable as agents of an employer after the employer’s decision to dismiss an employee, though they acted as agents when investigating grievances and conducting a disciplinary hearing.

   What led to the dispute, and why is the outcome significant for employers?

   • A protected disclosure is a whistleblowing report made by an employee about wrongdoing within their organisation. The disclosure is legally safeguarded to prevent retaliation, provided it concerns public interest issues like criminal activity or health and safety threats.
   • The claimant was an employee and director of The Station Hotel (Newcastle) Limited. After raising concerns about alleged financial misconduct – concerns which he claimed to be protected disclosures – grievances were filed against him for bullying and harassment. The Station Hotel engaged two HR consultancies: one to investigate the grievances, and another to conduct a disciplinary hearing, which concluded that his dismissal for gross misconduct was justified.
   • After being dismissed, the former employee brought claims against multiple parties, including unfair dismissal against the Station Hotel and whistleblowing-related detriment involving the HR consultants.
   • The Employment Tribunal struck out the claims against the consultants, finding they were not acting as agents of the Station Hotel. The Employment Tribunal also struck out the claims against both HR consultants, finding that the HR consultants did not act as agents when delivering their services and therefore the claims against them had no reasonable grounds for success. The claimant appealed both decisions.

   • The Employment Appeal Tribunal (EAT) dismissed the appeal but clarified the following points:

     • HR consultants can act as agents. The EAT disagreed with the Tribunal’s earlier view, stating there’s no reason external consultants conducting grievance or disciplinary investigations can’t be considered agents of the employer.
     • Whilst they were acting as agents in carrying out their services, their services did not include dismissing the claimant, as they did not make that decision, nor did they have the authority to do so. As a result, they couldn’t be held liable for the dismissal itself.

   Takeaways:

   • HR consultants are not personally liable for an employer’s decisions—even when those decisions follow the consultant’s investigation or advice.
   • External providers can be considered agents of the employer when they are contracted to provide services related to a significant aspect of the employment relationship.
   • Taken together, these decisions offer important clarity for employers on the limits of liability when relying on parent company structures or third-party service providers.