In Cunningham and Wilson v Clydebank Engineering & Fabrication Limited, the EAT overturned a decision of an Employment Tribunal that a Transferee in a TUPE transfer situation could not be liable for a dismissal that occurred before the transfer whilst the employees were employed by the Transferor.

Under TUPE, all liabilities of the transferor relating to employees (other than criminal liabilities and certain pension liabilities) transfer to the transferee. The transferee can therefore be liable even though the employees never did any work for the transferee.

There is nothing new in this decision, but it serves as an important reminder to transferees to obtain appropriate indemnities and warranties from a transferor in a TUPE situation to resign the commercial liability for the transferor’s actions back to the transferor so the transferor ends up footing the bill for his actions, not the “innocent” transferee.