What do I need to know about ‘vicarious liability’?

What do I need to know about ‘vicarious liability’?

If an employee injures someone in the course of their employment, the employer may be subject to vicarious liability. This simply means that the injured person may be able to win compensation for the harm from the employer, rather than the employee.

It is often to an injured person’s advantage to pursue an employer for compensation rather than an employee. This is because it is likely to be the employer who has the “deep pockets,” since the employer probably has insurance cover for the harm, and, in general, greater financial wherewithal than the employee.

This is not to say, though, that the employee can always count on getting away scot-free. Even if there is vicarious liability, the injured person does not necessarily give up any right he may have to pursue the employee individually. If, for some reason, the injured person is unable to get full compensation from the employer, then he might seek to recover the balance from the employee. In addition, the employer may well seek reimbursement for any amount paid to the injured person (although in practice this rarely occurs).

In insuring their businesses, employers generally assume that they will have vicarious liability for harm that employees cause in the course of their employment.

Generally, employers dispute vicarious liability claims on the following grounds:

  • the person who caused the harm was not an employee, but an independent contractor or other non-employee worker;
  • the employee did not harm the injured person in the course of the employee’s employment.

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Was the person who caused the harm an employee?

In general, if the person who caused the harm was an independent contractor, rather than an employee, then the employer will not be subject to vicarious liability. There are, however, exceptions to this rule. For example, if an employer fails to supervise an independent contractor properly or negligently appoints an incompetent contractor, then the employer can be liable for harm arising as a result. Another exception would be where an employer has a non-delegable statutory duty, which it cannot evade merely by appointing an independent contractor.

Ordinarily, though, an employer will not be liable for harm caused by an independent contractor. So the following question frequently arises when personal injury cases reach the courtroom: was the person who caused the harm an employee or was he an independent contractor?

In deciding this question, a court would look at factors such as the degree of control the employer has over the worker, whether the employer provides the necessary equipment and tools for the work, whether the worker bears any of the financial risk associated with the work, and whether the worker is paid as an employee under the PAYE system.

So an “owner-driver” who provides haulage services to a business, but uses his own vehicle, provides his own insurance, and also carries out haulage work for other businesses, is likely to be deemed an independent contract rather than an employee. On the other hand, where a clothing company provides workers with sewing machines, which they use at home to sew garments for the clothing company on a piecework basis, the workers will likely count as employees rather than independent contractors.

That independent contractor question also arises in tax cases (where, for instance, there may be a dispute as to whether a person should fall within the PAYE system) and employment cases (where a tribunal needs to decide whether there was a contract of employment giving rise to employment rights). The decisions in these areas involve similar principles, although the outcome will not always be the same. There is at least one case where a court held that an individual was an employee for purposes of vicarious liability, even though he had been treated as an independent contractor “for tax purposes.”

Did the harm occur in the course of employment?

As a general rule, the doctrine of vicarious liability does not apply if the employee had no express or implied authority from his employer to perform the task at hand. Courts applying this rule, however, often reach very different outcomes.

Driving cases

For example, there are a number of truck driving cases where the court has had to decide whether the driver was acting within the course of his employment when driving the vehicle outside a designated route.

Essentially, the pattern seems to be that if the driver’s job is to get from Point A to Point B, and his detour from the designated route was simply another way of getting to Point B, then he is acting within the course of his employment.

On the other hand, if the driver takes a detour for some other, non-business purpose (such as picking up a girlfriend and taking her shopping) then he would likely be regarded as acting outside the course of his employment.

Use of force

Where an employee deliberately harms a person at work, the courts appear to have a slightly greater tendency to find that the harm took place outside the course of employment than in cases where the harm was unintentional.

There are exceptions, however, for example where the use of force is part and parcel of the job — such as for a nightclub doorman. Even here the courts have reached different conclusions. In one case a doorman was motivated by personal revenge to assault a customer and the court held the employer vicariously liable; on almost identical facts in another case, however, the court found the employer not liable.

Since the patterns in case law are difficult to identify, this is almost a “common sense” or “know it when I see it” area of the law. For policy reasons (e.g., the desire to give injured people access to employers’ deep pockets) it may be that the courts generally tend to resolve “close calls” by deciding that the employer is liable for the harm caused by an employee.

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