From time to time, employees may make a mistake at work and employers could be held liable for it.
By law, employers can be held vicariously liable for certain acts of their employees. Vicarious liability can present a considerable area of risk which may require measures and management.
If an employer is liable then they could face hefty compensation fees or even employment tribunal hearings.
In this guide, we'll explain what vicarious liability is, what contract law imposes, and how employers can protect themselves.
What is vicarious liability?
Vicarious liability refers to a form of strict liability. This is when employers can be found liable for the wrongful actions of their employees.
It's a phrase used to explain the legal responsibility that one part may hold for the harmful actions of another.
Difference between full and vicarious liability
While full and vicarious liability are very similar and even overlap in some cases, they are two different forms of liability.
Full liability arises when any instance of liability in which an employer is directly responsible for its wrongful acts. Or for any wrongful act of an employee expressly authorised by the employer that causes loss or harm to a third party.
Examples of full liability include:
In contrast, it may not be clear whether wrongful action or an employee's conduct is authorised by the employer, but the latter may still commit vicarious liability.
Examples of wrongdoing in the workplace could give rise to employer vicarious liability include:
- An employee negligently operates machinery, injuring a customer.
- An employee infringes the terms of a contract used in work.
- An employee receiving sexual abuse at work by another staff member.
Vicarious liability in contract law
Employment under the Equality Act 2010, is not only employment under a contract but also in other categories, such as an apprenticeship or a worker.
Under common law, an employer can be held vicariously liable for tortious acts or discrimination of one employee towards another.
Would an employer be liable for all wrongful acts of its employees?
The employer will not be held liable for wrongful acts if they can show they took reasonable steps to prevent the employee from undertaking the negligent acts.
To establish a statutory defence, you need to:
- Show you have equal opportunities in place at work.
- Show employees and managers have received training on this policy.
- Show that action has been taken when discrimination has taken place.
As an employer, you have a statutory duty to prevent vicarious liability, discrimination and create equal opportunities in the workplace.
Legal tests to establish vicarious liability
Before an employer can be found vicariously liable for wrongful acts of those who they employ, two legal tests must be conducted:
- The relationship test: a relationship must exist between the employer and the employee which makes it genuine for the law to make the employer responsible.
- The close connection test: a sufficiently close connection must be established between the employer and culprit, where the wrongful act must be related to the conduct authorised by the employer to justify imposing vicarious liability.
Furthermore, vicarious liability is not just limited to the employer-employee relationship. Whether or not liability arises is a question of the law. Vicarious liability is a conclusion of law based on the facts of the case.
What does ‘in the course of employment’ mean?
‘In the course of employment’ relates to acts committed whilst under contractual employment. While negligence usually refers to an employee’s actions during the work day, it can also apply to actions off the clock, for example at a work-related event.
To establish vicarious liability, you must understand what actions are 'off the clock':
Commuting to work
When an employee commutes to work, they're not in the course of their employment. An exception is made if the employer pays the worker for the commute time and asks them to do a work-related errand on their way to work.
Social events can create a risk of vicarious liability for employers, especially when alcohol is involved.
Make it clear that your policies and procedures still apply when an employee represents the company in any capacity.
Vicarious liability for non-discriminatory acts of employees
An employer could be vicariously liable for acts of violence or abuse committed by its employees.
Vicarious liability for independent contractors
Vicarious liability doesn't apply in the same way to independent contractors. They operate under their own account and at their own risk.
This is because a business doesn't usually control the contractors' work. The independent contractor provides the materials, tools and workers if needed. Generally, the contractor (not the company registered) can commit vicarious liability for negligent acts by its employees.
An employer's business may be vicariously liable for a contractor's negligence if:
- The business chose an independent contractor who's incompetent. The business could be sued for negligent hiring if the contractor is unqualified.
- The work the contractor was hired for is dangerous.
- The business failed to fulfil a duty it couldn't legally give to the independent contractor.
How can you prevent vicarious liability?
As an employer, the risk of a claim can be reduced by ensuring employees are carefully recruited, competent, and trained properly for their role. This will help you prevent being held liable and allow you to build trust with your employees instead.
To avoid vicarious liability, you should also review your equal opportunities and harassment training to ensure that it's relevant and applied in practice.
Employers should also encourage acceptable ways of working and that any physical or verbal aggression will not be tolerated.
Get vicarious liability advice with Croner
Preventing vicarious liability at work can be difficult. Especially if you don't fully understand how you could be held liable for wrongful conduct made by your employee.
Vicarious liability can cause problems in your workforce. That's why it's crucial to carefully recruit, employ competent employees and train your staff properly, to prevent being vicariously liable.
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