TUPE Liability Clarified – London United Busways Ltd v De Marchi [2024] EAT 191

Employers, HR professionals and business owners involved in service contracts, tenders or business transfers where TUPE may apply.

Clarifies liability where an employee objects to a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

Mishandling TUPE objections can expose employers to unfair dismissal claims and unexpected liability depending on timing and process.

A recent case London United Busways Ltd. (LUB) v De Marchi and Abellio London [2024] EAT 191 revealed the complexities of working under the Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE.

Background to the Case

A Mr. De Marchi had been working as a bus driver for two decades by LUB from his local bus depot, even though his contract contained a clause to the effect that employees may be expected to work at any of the depots across London.

After LUB lost its tender for his route, his employer elected to exercise this right of transfer, unless the employee objected by a specified deadline under Regulation 4(9).

Given the options to transfer, resign or object, Mr. De Marchi objected to his transfer and requested redundancy, as the new depot was over an hour from his domicile. As this was not one of the three alternatives, LUB rejected his approach, and Mr. De Marchi took a leave of absence suffering from stress and anxiety as he had been informed that, if he failed to sign a new contract by the deadline, his employment would effectively be terminated.

The Legal Issue

Mr. De Marchi failed to respond and later brought a claim for unfair dismissal against the transferor.

The tribunal found that, while the employee may object to becoming employed by the transferee under Regulation 4(7) of TUPE, the effect of that objection is to preclude the transfer of his contract and any of the rights and obligations under Regulation 4(2) of TUPE.

However, Regulation 4(8) TUPE operates to terminate the contract with the transferor to the detriment of the employee.

Who Bears the Liability?

This ruling serves to provide useful guidance in terms of who is liable:

• If the objection occurs before the transfer, then the liability falls on the transferor.
• If the employee does not object to the transfer in a timely fashion and then tries to argue Regulation 4(9), then the liability falls on the transferee.

Real-World Application

Businesses losing or winning service contracts — such as transport operators, facilities management providers or outsourced service companies — should carefully manage communication, deadlines and documentation when TUPE applies. The timing of an employee’s objection can directly affect which party carries potential unfair dismissal liability.

Compliance Risk

Incorrect handling of TUPE objections may lead to unfair dismissal claims, financial liability and reputational damage. Employers should ensure that contractual clauses, transfer communications and objection deadlines are managed with precision.

It is thus advisable to seek legal advice before transferring employees to other positions or locations.

Beware the Legal Minefield of Transferring Contractual Undertakings and the Tax Risks in London

The transferring of contractual undertakings can trigger complex employment, payroll, and tax implications, particularly where TUPE rules apply and staff liabilities move between entities. Cigma Accounting, based in Wimbledon  in London, helps businesses understand the financial and reporting consequences of such transfers, providing structured support through expert accounting services London focused on compliance and risk mitigation.

Businesses operating around Motspur Park and New Malden often require clarity on PAYE continuity, benefit obligations, and potential historical liabilities before completing a transfer. With physical offices across London, Cigma Accounting offers practical guidance from an experienced tax accountant London to ensure contractual transfers are managed without creating avoidable tax exposure or regulatory complications.