02 April 2019

Vicarious liability

Vicarious liability image

The expansion of the doctrine of vicarious liability in the context of employment, and more generally, in recent years is unlikely to make happy reading for local authorities. The trend of the decisions in recent cases has made it increasingly likely that local authorities, as employers, will be on the hook financially for the actions of their employees, even where the behaviour of those employees has been extreme.

In common law an employer is vicariously liable for the tortious acts of its employees if they are carried out ‘in the course of employment’. Over the past few years a number of cases have broadened the potential circumstances where vicarious liability may be imposed, and the employer held liable for the actions of the employee.

In the case of Mohamud v WM Morrison Supermarkets (2016) a petrol station customer was the victim of physical assault by a Morrisons employee. The employee pursued the customer across the petrol station forecourt before assaulting him, ignoring attempted interventions by his supervisor who tried to stop him. The customer brought a claim against Morrisons for the injuries he suffered as a result of the assault. The issue was whether there was a sufficiently close connection between what the employee was employed by Morrisons to do and his actions to mean Morrisons should be held liable for their employee’s actions. The Supreme Court held that there was. The court confirmed that the test was whether the wrongful acts were so closely connected with employment that it would be just to hold the employer liable. The assault had happened on Morrisons’ premises and the employee was not acting in a personal capacity – he had not “metaphorically taken off his uniform from the moment he stepped from behind the counter”. As such Morrisons should be held liable.

Morrisons were again held to be vicarious liable because of the rogue actions of an employee in the case WM Morrison Supermarkets Plc v Various Claimants (2018). In this case an employee had acted maliciously in misusing the personal data of nearly 100,000 Morrisons’ employees, with the specific intention of damaging his employer’s reputation. Morrisons were held vicariously liable despite being held to be blameless by the Court of Appeal for the way it handled its employees’ personal data, and the fact that the employee was acting with malicious intent in an act of vengeance against his employer. The Court of Appeal confirmed that the motive of the employee was irrelevant, that there was a sufficient connection between the role in which the employee was employed and his wrongdoing to mean Morrisons should be held to be vicariously liable.

It is also worth noting that as a result of the case of Various Claimants v Barclays Bank Plc (2017) it is clear that a conventional employment relationship is not required in order to establish vicarious liability. This case involved a GP working as a self-employed independent contractor who carried out compulsory medical examinations on prospective Barclays Bank employees between 1968 and 1974. During these examinations he sexually assaulted a number of victims. Although the doctor organised his own professional life and carried other medical activities not for the bank, the High Court was satisfied that the relationship was sufficiently close to one of employment for vicarious liability to attach.

What has become clear from the case law and the guidance from the courts is that the best way for local authorities, as employers, to guard against the financial risks posed by the actions of rogue employees, or indeed contractors, is to insure against the associated risks. Such insurance would need to cover both negligence and the dishonest or malicious actions of employees acting in the course of their employment. Such insurance will undoubtedly come at a cost and the difficulty for local authorities will be in assessing the risk posed by vicarious liability and the appropriate level of cover to mitigate that risk.

Helen Snow, Senior Associate in the Employment team at Geldards LLP.

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