Vicarious Liability

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This article explains the common law principle of vicarious liability and will be useful reading for both employers and employees.

Introduction

Vicarious liability is the imposition of liability on one person for the negligence of another to whom the former has entrusted (or 'delegated') the performance of some task on their behalf.

There are many situations in which a party may be liable vicariously.

  • Contractors can be liable if their subcontractors fail to complete a job, perform the job incorrectly, or have violated their contract in other ways;
  • Parents are liable when the actions of their children cause harm or damage;
  • Most commonly associated with vicarious liability are employers. They can be liable for sexual harassment of one employee by another, discriminatory behaviour by an employee against fellow employees or customers, or any other action in which one of their employees personally causes harm, even if that employee acts against the policies of the employer;
  • Most recently, vicarious liability claims are being made against the manufacturers of mobile phones which contribute to road accidents.

This article concerns itself with vicarious liability in relation to employment law.

How does it work?

Vicarious liability has two essential characteristics. First, it is liability for the negligence (or other wrong) of another. Secondly, it is strict liability - that is, liability without proof of fault. A person can be vicariously liable for the negligence of another no matter how careful the person was in all relevant matters, such as choosing and supervising the other.  

An employer is vicariously liable for negligent acts or omissions by his employee in ‘the course of employment’. It does not matter whether the employer gave their permission for the employee to act, or not to act in the way that caused the damage.

Of course the vicarious liability of the employer is additional to the 'primary' liability of the employee for negligence. Both are liable - 'jointly and severally'. The common law implies into the contract of employment a term to the effect that the employee will perform the contract with reasonable care. On the basis of this term, the employer is entitled to recover from the employee a contribution to any damages which the employer is liable to pay to the person injured or killed. If the employer was not negligent at all, it will be entitled to be fully indemnified by the employee. In some Australian jurisdictions, there is legislation that provides (in certain types of case) that only the employer is liable, not the employee. In some jurisdictions there are also statutory provisions that remove the right of the employer (in certain types of case) to recover contribution or an indemnity from the employee.

In terms of personal responsibility, the most widely accepted justification for vicarious liability is that, because the employer takes the benefit of the business being conducted, the employer should also be required to bear risks attendant on the business. However, this justification is hard to reconcile with the employer's right to contribution or an indemnity. For this reason, many view vicarious liability simply as a form of liability insurance, intended primarily for the protection of plaintiffs, and not based on principles of personal responsibility.

And for independent contractors?

The broad rule here is that an employer is not vicariously liable for the negligence of independent contractors. The way the law distinguishes between employees and independent contractors is rather complex. Very simply, an independent contractor, whilst working for the employer, is in a position to complete the task at hand in the manner he chooses. The employer cannot direct as to how the task is completed. Employees on the other hand, are completely under the control of the employer.

Various exceptions have been developed to the rule that an employer is not vicariously liable for the negligence of independent contractors. Fr example, it is now well-established that a hospital is vicariously liable for the negligence of those who provide health-care services in its name, regardless of whether the provider is an employee or an independent contractor of the hospital.

Avoiding vicarious liability

To avoid vicarious liability, an employer must demonstrate either:

  • That the employee was not negligent (this is the most common defence when an accident has occurred, for example an employees slips at work because another employee did not erect a “wet floor” sign), or;
  • That the employee was acting in his own right rather than on the employer's business. (This is the most common defence in discrimination cases).

Until the late 1990's the basic test for deciding whether an employer should be held liable in such a case was to consider whether the employee had used an unauthorised method to do a job he was authorised to do. If he was simply doing something which was unauthorised, the employer would not be vicariously liable).

The correct test today, is to concentrate on the connection between the nature of the employment and the particular wrong. The courts would then decide generally, whether it is just and reasonable, to hold the employer vicariously liable.

The government is considering introducing rules under which employers may carry some responsibility for road accidents involving employees on business.

Liability of individual persons

The vicarious liability provisions of the legislation do not stop individual persons from being held liable for their own discriminatory or harassing behaviour in connection with their employment. It may be that both the employer who has been found to have not taken reasonable steps to prevent the discrimination and harassment from occurring and the individual who is the alleged discriminator or harasser will be held jointly liable for the behaviour”.

It is therefore not an excuse for an employer to say “I didn’t know it was happening”. Even if the event occurs without the knowledge of an employer, if reasonable steps have not been taken to prevent the event happening, the employer may still be liable.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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