Topic 2 Vicarious liability

Introduction Vicarious liability arises when one party is responsible for the torts of another. This situation occurs most frequently when an employer is held responsible for torts committed by an employee. The concept may appear unfair, since it holds a third party responsible for the actions of another, despite the fact that there may be no fault on the part of that third party. Vicarious liability can be justified, however, by the idea that if someone has control over another, he or she should be held responsible for the other’s actions.

Key questions In order for vicarious liability to apply, the courts must ask two questions: Was the person who committed the tort employed by the defendant? Was the tort committed in the course of that employment?

Employees Employers are liable for torts committed by their employees, but not for those committed by independent contractors. Independent contractors include, for example, plumbers or electricians hired by a householder, and they are usually responsible for their own torts. In terms of vicarious liability, it is therefore essential to establish exactly who is classed as an ‘employee’. While this may appear straightforward at first, it has proven to be surprisingly tricky in some cases, and the courts have developed several tests to determine the status of a person’s employment.

Tests for employment status Over the years, the courts have used several different tests to try to determine whether someone can be classified as an employee or not. The courts do not use a single test but instead look at all the factors and circumstances before reaching a decision on employment status.

Control test The courts look at who has control over the way that the work is carried out. If the employer sets out how the work is to be done and when it is to be done by, the courts are more likely to consider the person carrying out the work to be an employee. If, on the other hand, it was up to the person carrying out the work to determine how and when it should be done, that person would be more likely to be classed as an independent contractor.

Integration test This test asks whether the person’s work is an integral part of the business. A person employed to work on the till in a shop would usually be an employee; however, if the till was broken, the person called in to fix it would probably be an independent contractor, as his or her work would be incidental to the business of running the shop.

Economic reality test (1) The courts may also look at any contract between the two parties, as these terms may indicate the status of the relationship. It may be a contract of service, in which case the person is more likely to be an employee, or it may be a contract for services, which would indicate an independent contractor. It would be for the court to decide, taking into account several factors.

Economic reality test (2) Conditions inconsistent with a contract of service may include, for example: the ability to hire your own employees the requirement that you provide your own tools and materials the fact that you pay your own tax and national insurance The courts will also consider how and when someone is paid, whether it is a lump sum for a job or a monthly salary.

Employees on loan Sometimes, an employee may be ‘on loan’ to another employer. If the employee commits a tort while on loan, it must be determined for whom he or she was working at the time. The usual rule is that the employee remains the responsibility of the first employer who loaned him or her out.

The course of employment (1) An employer will only be liable for torts that an employee commits in the course of employment. This is determined on the facts of each case. This may, at first, appear to be straightforward: as long as the tort was committed when the employee was doing his or her job, the employer is liable. Problems arise, however, when an employee was doing his or her job in an unauthorised manner or in a way expressly forbidden by the employer. The courts often struggle to determine what exactly the phrase ‘in the course of employment’ means, and there is no definitive test.

The course of employment (2) The classic test is that of Salmond, taken from the text Salmond on Torts, which stated that tortious acts are done in the course of employment if they are: wrongful acts actually authorised by the employer, or wrongful and unauthorised ways of doing acts authorised by the employer

The course of employment (3) An employer will be vicariously liable for an employee’s tort when: the employee has carried out an authorised act in a careless way the employer has allowed the employee to do an unlawful act the employee has carried out an authorised act in an unauthorised way the employee has carried out an act that had been expressly forbidden but was for the benefit of the employer

Employer’s indemnity As vicarious liability means that two parties are held responsible for a tort, the Civil Liability (Contribution) Act 1978 applies. This means that an employer found vicariously liable may, in turn, sue its employee to recover some or all of the damages awarded against it. Common law also allows the employer to recover damages from the employee in certain circumstances (see Lister v Romford Ice and Cold Storage Co., 1957).

Independent contractors (1) A person who employs an independent contractor will not usually be responsible for any tortious acts committed by the contractor. Occasionally, however, liability may be imposed on the person who employed the independent contractor if he or she is in breach of a duty that he or she owes to the claimant, for example if the person has not checked that the independent contractor is competent to undertake the work. A breach may also occur if the duty cannot be delegated to another — commonly termed ‘non-delegable’.

Independent contractors (2) It is a question of law in each case as to whether a duty can be delegated or not. If it cannot, although the work may be carried out by an independent contractor, responsibility for it lies with the person who employed the contractor. An example of a duty that cannot be delegated is that which falls on an employer who takes on an independent contractor to carry out work that is inherently dangerous. The employer will owe a duty to those who might be injured by such work.