Transfer of undertakings: Settlement did not protect transferee

In Thompson and others v (1) Walon Car Delivery and (2) BRS Automotive Ltd [1997] IRLR 343, the EAT holds that the transferee of an undertaking was not entitled to rely upon a settlement negotiated by the transferor so as to exclude employees' unfair dismissal claims, where the employees were dismissed prior to the transfer and the settlement was not finalised until after the transfer took place. Since the dismissals were effected by reason of the transfer, the transferor was liable for unfair dismissal, and that liability transferred exclusively to the transferee at the moment of transfer.