Last reviewed 7 March 2018
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) were introduced to provide protection to employees in the event of a change of employer and to ensure that their rights are safeguarded. Barrister Robert Spicer considers a recent case on whether the new employer was liable in the case of a workplace injury with an historic cause.
Where there is a transfer to which TUPE applies, the new employer effectively stands in the shoes of the old employer, and employees maintain continuous employment. TUPE transfers existing contractual terms and conditions and any outstanding liabilities and rights.
TUPE was originally introduced to implement the European Acquired Rights Directive. This means that TUPE is interpreted according to decisions of the European Court of Justice. The law in this area is complex and constantly developing, and the effect of Brexit remains to be seen. The basic principle is that it is automatically unfair to dismiss an employee because of the transfer of an undertaking, unless the dismissal can be proved to have been for an economic, technical or organisational reason.
There are two types of transfer covered by TUPE: business transfers and service provision changes. The mechanism of the transfer does not matter, provided that there is a change of legal person responsible for running the undertaking who acts as employer.
Regulation 4(2)(b) of TUPE states: “any act or omission before the transfer is completed, of or in relation to the transferor in respect of the contract of employment, shall be deemed to be an act or omission in relation to the transferee”.
TUPE and employers’ liability
The relationship between TUPE and the liability of employers for workplace injuries has recently been considered by the High Court in the case of Baker v British Gas Services (Commercial) Ltd and J&L Electrics (Lye) Ltd (2017). The case concerned a worker who suffered a massive electric shock after a TUPE transfer, where the cause of the injury occurred before the transfer. The issue, essentially, was whether the transferee employer was liable to compensate the worker for the injury.
B was employed by BGS to provide electrical repairs and maintenance. In July 2012 he was replacing a series of lamps. He was working at height with one of the light fittings when he was electrocuted. He suffered a cardiac arrest and severe brain injuries when he fell to the floor. The reason for the electrocution was that a junction box had been wrongly wired. This caused the casing of a lamp to be permanently live, whether the light switch was on or not. J&L Electrics had installed the circuits and the lighting eight years before the incident. On behalf of B it was argued that the miswiring had happened at the original fitting and had been present since then.
Before 2010 B was employed by Connaught Compliance Electrical Services Ltd, which had carried out periodic inspections, including in 2009 and 2010. In 2010 B’s employment was transferred to BGS by TUPE transfer. B argued that although J&L had miswired the lamp, BGS was also liable because it had failed to identify the fault during subsequent inspections. The decision of the High Court was as follows.
As a question of fact, the fault had occurred at the time of the original installation and J&L was plainly responsible for it. Liability on the part of J&L was established.
The defect was present when periodic inspections were carried out in 2009 and 2010. The defect was not discovered during those inspections. Expert evidence showed that it should have been. Connaught was responsible for carrying out routine inspections and was in breach of the fundamental common law principle that an employer is required to take all reasonable steps to avoid risk of injury to employees. There was no excuse for not detecting and remedying an obvious hazard. The fact that an employer had a “work-dead” policy, meaning that employees were obliged to de-energise the circuit before working on components, did not remove the duty to take other reasonable precautions to protect employees from a risk of injury.
If it had not been for the TUPE transfer, Connaught would have been vicariously liable for the failure of its employee to carry out an inspection of the fittings with due care. Connaught’s last inspection was carried out on 21 September 2010. One week later, BGS purchased Connaught’s assets. Payment for the inspection was received by BGS after the date of the transfer. BGS therefore had the benefit of the work done by Connaught before the transfer.
It was argued on behalf of BGS that at the date of the transfer there was no liability under TUPE. There was no authority for imposing liability on the transferee for liabilities which were unknown to the employee or the transferor, because they did not exist. It was further argued that it was well established that an employee could recover for personal injury sustained before a relevant transfer and caused by the transferor’s breach, but liability did not arise where the breach occurred before the transfer but injury was sustained only after the relevant TUPE transfer date.
The effect of TUPE was that all rights, powers, duties and liabilities under or in connection with B’s contract of employment transferred from Connaught to BGS. The situation where a breach of an employer’s duty happens before the transfer, but injury occurs after the transfer, falls within TUPE.
An injured employee’s duty is deemed to be continuous. Duties and liabilities under or in connection with his contract transfer with him.
Tortious liabilities transfer whether they are fully accrued or contingent. To hold that an employee who is injured after the transfer, but as a result of a breach of duty committed before the transfer cannot recover against the transferee would frustrate the whole purpose of the TUPE Regulations.
Pursuant to Regulation 4(2)(b) of TUPE, liability will pass from the transferor to the transferee, even where negligent acts or omissions occur pre-transfer but the personal injury is not suffered until after the transfer.
BGS was 25% to blame and J&L was 75% to blame.
There was no contributory negligence on the part of B.