Vicarious liability in the Supreme Court: Paul Killen, partner in the Osborne Clarke employment team, reviews the boundaries to employer liability

Written on 14 Mar 2016

Employers should be aware of two Supreme Court decisions which push the boundaries of the circumstances in which they may be held liable for the actions of another through the concept of vicarious liability.

Policies and procedures…

Many workplaces are well stocked with policies and
procedures, accompanied by training, which dictate how an employee should
behave and carry out their duties and responsibilities in the course of their
employment.  Not only do these assist the
business in running as efficiently as possible, they should also help minimise
the risk of an employer not only breaching its own legal obligations but also
the wrongs of an individual working for it. 

…but what happens when…

But what happens when an employee commits a wrong against
another person which is perhaps arguably only loosely connected with their
employment?  What if the individual who
commits the wrong does not have a traditional employment relationship with the
business they are providing services for? 
Can an employer be held vicariously liable for their actions?  Understanding and managing workplace liability
will be a critical issue for employers in the future as they adapt to different
ways of working and employment models in light of new technology and business
demands.

What is the test for
establishing if an employer is vicariously liable?

Broadly speaking the test for vicarious liability requires
two limbs:

  • a relationship between the
    wrongdoer and the person alleged to be liable (the defendant); and
  • a sufficiently close
    connection between the relationship in issue (i.e. the relationship between the
    wrongdoer and defendant) and the wrongful act or omission.

The Supreme Court (SC) has now handed down two decisions
exploring each of these limbs.

In Cox v Ministry of Justice (MoJ) (here),
the SC ruled that the MoJ could be held vicariously liable for the negligence
of a prison worker in a prison kitchen. Despite there not being a traditional
employment relationship, the relationship was akin to it. The facts of the case
concerned a catering manager at a prison, who suffered a back injury after a
prisoner working in the kitchen negligently dropped a sack of rice on her.

In Mohamud v WM Morrison (here),
the SC considered whether Morrisons Supermarket could be deemed vicariously
liable for the acts of its employee, who had carried out a violent attack on a
customer at Morrison’s petrol station. 
The customer had stopped at the petrol station which was being manned by a Morrisons‘ employee.  The customer
asked if Morrisons would print documents from his USB stick. The employee
responded to this request by reportedly using foul and racist language and ordering that the
customer leave the premises immediately. The employee subsequently pursued the
customer into the petrol station forecourt, ordering that he did not return and
a physical interaction ensued. The SC held that the employee’s acts were
sufficiently connected to his employment to enable Morrisons to be held
vicariously liable for his misconduct.

The rulings in both Mohamud
and Cox appear to indicate that the
SC is becoming much more willing to take a flexible approach when applying both
limbs of the test. In delivering the decisions, Lord Reed emphasised the
fluctuating nature of the test for vicarious liability, which remains “on the move“ and
has “not yet come to a stop“.

No need for a strict employment
relationship with the wrongdoer

The requirement for there to be a sufficient relationship
between the wrongdoer and the person alleged to be liable is typically
discharged by establishing that there is an employment relationship in
existence.

However, as the SC confirmed in Cox, the absence of a strict employment relationship is not
critical.  It referred to previous case
law which had created a “modern
theory of vicarious liability”
where liability could be triggered even
in the absence of a traditional employment relationship.  In doing so, the SC focused on those cases
where:

  • the alleged wrongdoer is
    carrying out activities for the defendant’s benefit as an integral part of its
    business; and
  • the defendant, in assigning those
    activities to that individual, has created a risk of the wrong being committed.

It was further noted that this concept of carrying on
activities for the defendant’s “benefit“, is
not merely confined to matters of commercial enterprise or profit. (For
example, in Cox, the benefit of the
prisoners working in the kitchens was to achieve a rehabilitation objective as
part of a wider penal policy).  Other
examples of the broader application include: an employer being held liable for
an off duty officer who shot a member of the public, and a night club owner
held responsible for their bouncer stabbing an individual outside of their
premises (even though he had returned home first to retrieve the weapon).

How close a connection must
there be between the relationship in issue and the wrong committed?

The House of Lords in Lister
established a sufficient connection test, where the question is asked as to whether
the wrongdoing was so “closely
connected“
with the employment that it would be fair and just to hold the
employer vicariously liable.

Whilst the SC in Mohamud
reiterated that this test remained good law, in applying the principles, it focused
on the following key questions:

  • what were the functions
    entrusted to the employee (i.e. the nature of the job); and
  • was there a sufficient
    connection between the position and wrongful conduct to make it right for the
    employer to be held liable? 

In Mohamud, the
employee’s job was to attend to and respond to their enquiries and when he had
entered into the violent altercation, he was answering the customer request to
print documents and was ordering him not to return to his employer‘s
(Morrisons) premises. Regardless of the fact that the conduct in question was
clearly a gross abuse of the employee’s position (and notwithstanding his own
personal motives), his acts were within the “field of activities“
delegated to him and as such, they remained in close connection with his
employer‘s business.

What does this mean for
employers in the future?

The indication from the above cases is that the courts may
well be taking a broader approach to their application of the vicarious
liability test.

Extended application would clearly be of concern for
employers, particularly those with larger workforces.  Indeed, it is possible to envisage
organisations being similarly found liable for the acts of individuals that are
simply engaged on work placements or as unpaid volunteers. These initiatives
are widely utilised across a range of sectors and increased liability could
operate as a deterrent to offering these schemes or (at the very least) make
employers more astute to ensuring that comprehensive training has been provided
at the outset of their engagement. 

Whilst employers should not necessarily react by producing
yet more policies and procedures, ensuring that an effective suite is in place
and that employees understand these – and what is expected of them – will be
crucial in the event of an employee’s wrongful conduct.  That should enable an employer to demonstrate
that it has taken all reasonable steps to prevent the acts or omissions
complained of, and minimise the risk of costly and time-consuming legal claims –
as well as the impact on their employer’s liability insurance.