TUPE does not transfer liabilities that arise after the transfer date

The EAT has held in Coutinho v Vision Information Services (UK) Ltd and Rank Nemo (DMS) Ltd that liabilities that arise after the transfer date in the transfer of an undertaking do not transfer to the transferee.

Background

Mr Coutinho was made redundant by Vision in March 2004. In July that year Vision's business was sold to Rank. TUPE applied to this acquisition. Mr Coutinho raised a claim of unfair dismissal and race discrimination against Vision and Rank, which was successful. The tribunal held that the dismissal had been for a reason connected with the transfer and there was no ETO reason, so liability for the claim passed to Rank by virtue of TUPE. During the remedies hearing he asserted that he had also been victimised as Vision had failed to give him a fair reference. He brought his claim against both Rank and Vision (as by this time Vision was no longer in existence).

The tribunal struck out Mr Coutinho's claim against Rank for failure to provide a reference and the EAT dismissed the appeal. The Regulations only provide that liabilities in existence at the time of the transfer pass to the transferee and not those created by the transferor's acts after the transfer has occurred.

Impact on employers

The facts of this case are quite rare, however it acts as a reminder that only liabilities incurred pre transfer will pass to the purchaser of a business or an incoming contractor on a service provision change. It should be noted that the EAT confirmed that the duty to provide a fair reference will transfer under TUPE and the ex-employee could have brought a claim against Rank on that basis.