Vicarious Liability: When Employers Are Liable for Employee Actions

Employers can be held legally responsible for wrongs committed by their employees. Understanding this helps you manage risk.

What Is Vicarious Liability?

The Concept

Employer liability for employee acts committed "in the course of employment" - even if:

• Employer didn't authorise the act
• Employer didn't know about it
• Employer expressly prohibited it

Why It Exists

Policy reasons:

• Employers benefit from employee work
• Employers can manage risk
• Victims can recover compensation
• Encourages proper supervision

Who Is Covered

Traditional view: employees only.

Modern approach: anyone sufficiently integrated:

• Employees (definitely)
• Workers (likely)
• Agency workers (often)
• Independent contractors (sometimes)

The Legal Test

"Course of Employment"

Two-stage test:

1. What functions was employee employed to perform?
2. Was there sufficient connection between job and wrongful act?

Close Connection Test

From Lister v Hesley Hall and subsequent cases:

"A sufficiently close connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable."

Not Just Opportunity

Connection must be more than:

• Being at workplace
• Having opportunity
• Access to victim

Must be linked to the work itself.

Types of Liability

Negligence

Employee's negligent acts:

• Careless driving (work vehicles)
• Workplace accidents caused by negligence
• Professional negligence

Harassment and Discrimination

Under Equality Act 2010:

• Automatic liability for employee discrimination/harassment
• "Reasonable steps" defence available
• Includes harassment by third parties in some cases

Assault and Violence

If connected to employment:

• Security guard using excessive force
• Care worker abusing patient
• Even acts outside working hours if work-related

Fraud and Dishonesty

If within "field of activities":

• Accountant committing fraud
• Employee stealing from clients
• Using work systems dishonestly

Equality Act Provisions

Employer Liability

Section 109: Employer liable for discrimination/harassment by employee unless shows "all reasonable steps" defence.

The Defence

Employer must prove:

• Took all reasonable steps
• To prevent the particular act
• Or acts of that kind

What "Reasonable Steps" Means

Likely reasonable:

• Clear anti-harassment policy
• Regular training on equality
• Accessible complaint procedure
• Proper investigation of complaints
• Disciplinary action when warranted
• Regular policy review

Unlikely sufficient:

• Policy only (no training)
• Training once years ago
• Ignoring complaints
• Not enforcing rules

Third Party Harassment

Employer may be liable if:

• Knows harassment is occurring
• Fails to take reasonable steps to prevent

Example: Customer harassing employee repeatedly.

Criminal Conduct by Employees

Can Employer Be Liable?

Yes, if sufficiently connected to employment.

Leading case: Mohamud v WM Morrison Supermarkets (2016)

• Employee assaulted customer at petrol station
• Supreme Court: employer liable
• Connection was serving customers (even though assault wasn't serving)

Factors Considered

• Was employee "on duty"?
• Did job create opportunity?
• Was there continuous sequence of events?
• Did act arise from job function?

Not "Frolic of Own"

No liability if:

• Completely unconnected to job
• Personal matter only
• Outside scope of duties
• No link to employment at all

Managing Risk

Policies and Procedures

Essential policies:

• Equal opportunities/anti-discrimination
• Anti-harassment and bullying
• Disciplinary and grievance
• Acceptable conduct

Policy requirements:

• Clear, accessible language
• Distributed to all employees
• Regular updates
• Management endorsement

Training

Initial training:

• At induction
• Cover key policies
• Expectations clear

Ongoing training:

• Regular refreshers
• Tailored to role
• Updated for law changes
• Managers get additional training

Monitoring and Supervision

• Adequate supervision levels
• Clear reporting lines
• Regular check-ins
• Performance management

Investigation and Action

When issues arise:

• Investigate promptly
• Take concerns seriously
• Disciplinary action where warranted
• Document everything

Documentation

Keep records of:

• Policies and versions
• Training (who, when, what)
• Complaints and investigations
• Disciplinary actions
• Risk assessments

Specific Scenarios

Scenario 1: Driver Accident

Employee drives company van negligently, injures pedestrian.

Likely liable: Driving for work purposes, negligence in course of employment.

Scenario 2: Office Harassment

Employee sexually harasses colleague at work.

Likely liable: Unless employer shows took all reasonable steps (policy, training, enforcement).

Scenario 3: Social Event

Employee assaults colleague at company Christmas party.

Possibly liable: Extension of workplace, work-organised event, alcohol provided by employer.

Scenario 4: Social Media

Employee posts discriminatory comments about colleague on social media at home.

Possibly liable: If about work colleague and affects workplace relationship.

Scenario 5: Customer Assault

Employee attacks customer after argument.

Likely liable: Arose from customer interaction which is job function (see Mohamud).

Insurance

Employers' Liability Insurance

Compulsory for most employers:

• Covers injury/illness to employees
• Arising from employment
• Minimum £5 million cover

Public Liability Insurance

Not compulsory but advisable:

• Covers injury/damage to third parties
• Arising from business activities
• Usually £1-5 million

Professional Indemnity

For professional services:

• Covers negligent advice/services
• Client losses
• Often required by regulators

Exclusions to Check

Policies may exclude:

• Deliberate acts
• Specific types of liability
• Fines and penalties
• Criminal acts

Employee's Position

Can Employer Recover from Employee?

In theory, yes:

• Contribution or indemnity
• If employee was at fault

In practice:

• Rarely pursued
• Employee may not have means
• May be covered by insurance
• Could be seen as deterrent to reporting

Employee's Own Liability

Employee may also be personally liable:

• To victim directly
• For disciplinary consequences
• Criminal liability separately

After an Incident

Immediate Steps

1. Address immediate safety
2. Document what happened
3. Preserve evidence
4. Notify insurers
5. Begin investigation

Investigation

• Independent if possible
• Gather evidence promptly
• Interview witnesses
• Document findings
• Determine facts

Response

• Address victim's needs
• Disciplinary action if warranted
• Review and improve systems
• Implement learning
• Report to authorities if required

Checklist

Prevention

• Clear policies on conduct
• Policies distributed to all staff
• Regular training (documented)
• Adequate supervision
• Complaint procedures accessible
• Complaints investigated properly
• Disciplinary action taken when needed
• Regular policy reviews

Documentation

• Training records kept
• Policy versions archived
• Complaints and outcomes recorded
• Investigations documented
• Risk assessments completed
• Insurance documentation

Insurance

• Employers' liability in place
• Public liability considered
• Professional indemnity if relevant
• Policy exclusions understood
• Claims procedure known