VICARIOUS LIABILITY. When employees turn bad": Who is liable to whom for what?

Transcription

1 - 1 - VICARIOUS LIABILITY When employees turn bad": Who is liable to whom for what? INTRODUCTION 1. Those who advise Respondents may feel that they have a difficult enough task in ensuring that employers behave appropriately towards their employees. A still harder task lies in ensuring that the employers themselves ensure that their employees behave appropriately to one another, and to third parties. When advising Claimants it is essential to identify potential Respondent s by reference not only to their liability but also to their ability to pay compensation. 2. The simple premise that an employer is liable for the wrongs of his workers gives rise to a number of potentially difficult questions, namely: 1. Which workers? 2 Which wrongs? 3 In what circumstances? WHICH WORKERS? Employees 3. The first question to be determined is whether the wrongdoer is an employee (or, in the quaint language of the authorities, a servant). We are all well familiar with

2 - 2 - the many tests which courts and tribunals have laid down over the years in an attempt to answer the vexed question of who is an employee. By way of reminder: i) An employee is someone retained under a contract of service, as opposed to a contract to provide services. The service provided must be personal service. 1 Thus an employee provides his skill and labour, whereas an independent contractor provides the fruits of his skill and labour. ii) The most venerable method of looking at the relationship between the parties is the control test. Does the employer have sufficient control not only over what work is done but also over the way in which it is done? A servant is a person subject to the command of his master as to the manner in which he shall do his work. 2 iii) The control test having been discovered to be somewhat too simplistic, the organisational test was developed. This involves examining whether the worker is integrated into the business of the employer, or whether the work done is an accessory to that business. 3 iv) The difficulty with the organisational test lies in its vagueness. Similarly what is called the economic reality test, which attempts to answer the question whether, in the eyes of an onlooker, a worker is not employed but is in business on his own account. 4 Factors which may be taken into account include opportunities of profit or loss, the degree to which the worker is 1 Ready-Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB Yewens v Noakes (1880) 6 QBD 530, per Bramwell LJ. For a recent decision examining control, see Bunce v Postworth Ltd [2005] EWCA Civ 490, [2005] IRLR 557, CA 3 See Stevenson Jordan & Harrison Ltd v MacDonald v Evans [1952] 1 TLR 101

3 - 3 - required to invest in the job (e.g. by provision of tools or equipment), the skill required for the work, and the permanency of the relationship. v) The approach now favoured by the courts (and tribunals) borrows from all of the above approaches. Perhaps the best summary of the approach can be taken from Hall (Inspector of Taxes) v Lorimer 5. The features to look for in an employment relationship are: vi) The irreducible minimum that the employee is obliged to provide his own work and the employer is obliged to provide remuneration for it. vii) Sufficient control by the employer over the way in which the employee works. viii) An absence of other factors inconsistent with an employment relationship. Non-employees 4. The scope of liability will depend upon the circumstances of the case. Thus a worker who is not an employee for one purpose may be treated as such for another. See Willy Scheidegger Swiss Typewriting School (London) v Minister of Social Security 6, in which it was held that a worker may be an employee for the purposes of vicarious liability for torts, but not for the purposes of national insurance. 4 Lee v Chung & Shung Shing Construction and Engineering Co Ltd [1990] IRLR [1994] IRLR (1968) 5 KIR 65

4 Harvey succinctly identifies the position as follows: The employer is vicariously liable for the torts of his servant, but he is also liable for the torts of other workers, if in the circumstances he has a sufficient degree of control over them to make it fair and reasonable to fix him with liability for their activities. Other People s Employees 6. What if one employer lends an employee to another? Such an arrangement may take place for either the employers or the employee s benefit (for example by way of secondment). The traditional position is that responsibility for the worker s actions transfers to the borrowing employer 7 (This is consistent with the control test since it is that employer who controls the way in which the employee works, as well, arguably, as with the organisational test). 7. Greater complexity arises where employers share a measure of control over a worker. This is particularly common in the construction industry, where there may be a chain of contractors and subcontractors, with workers responsible to more than one contractor (or responsible to different contractors for different purposes), but may arise in any circumstances where two employers work together. The position was very recently examined by the Court of Appeal in Viasystems (Tyneside) Ltd Thermal Transfer Northern Ltd and others. 8 The court concluded that the question to determine vicarious liability was who was entitled to exercise control over the relevant act or operation of the worker. The inquiry should 7 See Nokes v Doncaster Amalgamated Collieries Ltd [1940] 3 All ER 549; and Mersey Docks & Harbour Board, v Coggins & Griffith (Liverpool) Ltd [1946] 2 All ER [2005] EWCA Civ 1151; (2005) IRLR 983

5 - 5 - concentrate on the relevant negligent act and then ask whose responsibility it was to prevent it: who was entitled and obliged to give orders as to how the work should or should not be done. Entire and absolute control was not a necessary precondition of vicarious liability 8. While the decision refers to negligence (Viasystems was a personal injury case), there seems no reason why it could not be equally applicable to other wrongs (see below). 9. The Court of Appeal went on to conclude that there is no reason why more than one employer cannot be vicariously liable for the wrongs of an employee. If both have sufficient control over the wrongful act, both can be liable. In Viasystems, liability was split Direct Liability 10. In some case an employer will be not vicariously liable but directly liable for the acts of others, if it unlawfully failed to provide its employee with protection, for example by negligently failing to prevent a risk (e.g. stress) or by discriminating against an employee in knowingly allowing its employees, for example to commit acts of racial or sexual harassment. 9 9 Note that the failure to take reasonable steps to prevent an employee from racial or sexual abuse is discrimination only where the reason for that failure to act amounts to race or sex discrimination itself. See Pearce v Governing Body of Mayfield Secondary School [2003] UKHL 34, [2003] IRLR 512, HL, overruling Burton and Rhule v De Vere Hotels [1996] IRLR 596, EAT.

6 - 6 - WHICH WRONGS? Tort 11. Claims in tort are more usually found in the personal injury field, but of course negligence claims include those for stress at work. Claims in respect of assault, battery and deceit might lead to vicarious liability, but depending upon all the circumstances (see below). Discrimination 12. The Sex Discrimination Act 1975 provides that an employer is vicariously liable for the acts of his employee done in the course of employment (s 41). For these purposes, employment includes employment under any contract personally to execute any work or labour, and is not confined to a contract of service or apprenticeship (s 82). Thus some of the nice distinctions between employee and independent contractor may be of less force in a discrimination case. Similar provisions appear in the Race Relations Act 1976 (s 32) and the Disability Discrimination Act 1995 (s 58). Harrassment 13. It now appears that vicarious liability is not restricted to common law claims. In Majrowski v Guy s & St. Thomas s NHS Trust 10 the Court of Appeal held that an employer could be vicariously liable for breach of a statutory duty imposed on its employee, so long as it was fair and just to impose vicarious liability and so long as there was a close connection between the employee's offending conduct and the 10 [2005] EWCA Civ 251; (2005) IRLR 340

7 - 7 - nature of his employment. The statute relied on was the Protection from Harassment Act 1997 and the employer was found liable under s 3 of the Act for harassment committed by one of its employees in the course of her employment. The case was, in effect, a classic case of workplace bullying and opens up a new route for claimant s to seek a remedy for harassment in the workplace. 14. Leave to appeal to the House of Lords has been granted. Watch this space 15. Harassment claims may in any event be brought directly against an employer, if it can be shown that the employer knows or ought to know about it and has failed to take reasonable steps to prevent it. This avoids the need to consider vicarious liability. In this context, see the comments of Lord Hutton in Waters v Commissioner of the Metropolitan Police 11 : It is not every course of victimisation or bullying by fellow employees which will give rise to a cause of action against the employer, and the employee may have to accept some degree of unpleasantness from fellow workers. IN WHAT CIRCUMSTANCES? Common Law 16. In Aldred v Nacanco 12 the Court of Appeal identified the classic test for determining whether vicarious liability exists at common law: 11 [2000] IRLR 720, HL 12 [1987] IRLR 292

8 - 8 - It is clear that the master is responsible for acts actually authorised by him: for liability would exist in this case, even if the relation between the parties was merely one of agency, and not one of service at all. But a master, as opposed to the employer of an independent contract, is liable even for acts which he has authorised that they may rightly be regarded as modes although improper modes of doing them. In other words, a master is responsible not merely for what he authorises his servant to do, but also for the way in which he does it. If a servant does negligently that which he was authorised to do carefully, or if he does fraudulently that which he was authorised to do honestly, or if he does mistakenly that which he was authorised to do correctly, his master will answer for that negligence, fraud or mistake. On the other hand, if the unauthorised and wrongful act of the servant is not so connected with the authorised act as to be a mode of doing it, but is an independent act, the master is not responsible: for in such a case the servant is not acting in the course of his employment, but has gone outside of it The key question, therefore, is as to how closely the wrongful act is connected with the employee s work. If it is not a mode of doing the work, vicarious liability cannot be found. Thus a bullying style of management may be a mode of working, but an unprovoked assault outside working hours may not be. This contrasts with discrimination law, see below. 13 Emphasis added

9 - 9 - Discrimination 18. The discrimination statutes provide that the acts must be in the course of his employment, a test which is somewhat wider than the common law test set out above. Thus in Jones v Tower Boot Co Ltd, 14 where the claim was made in respect of a course of abuse which included his being burnt with a hot screwdriver, having metal bolts thrown at him and being whipped with pieces of welt, the Court of Appeal held that the words course of employment should be given a broad interpretation, in line with the meaning that everyday laymen would use. The common law approach was expressly found to be narrower and inapplicable. 19. The position with regard to statutory vicarious liability is summed up in Harvey: The employer is not to be held liable merely because the opportunity to commit the wrongful act has been created by the employee s employment, or because the act in question has been committed during the period of that particular employment (Irving and Irving v Post Office [1987] IRLR 289, CA) but, on the other hand, an employer will not necessarily escape liability simply because the act is done outside working hours and/or outside working premises. In reaching a decision on vicarious liability under the statutory test the employment tribunal has a discretion and it will be right for it to have regard to all relevant facts (including the nature of the event at which the act takes place and the parties present) before coming to a decision one way or the other. 14 [1997] IRLR 168, CA

10 Thus in Chief Constable of the Lincolnshire Police v Stubbs, 15 the Respondent was held vicariously liable for actions which took place in a pub frequented by police officers after their work. Sufficient connection with work may be found accordingly in social or other circumstances provided that there is sufficient connection with employment. Employers cannot content themselves with dealing with employee s conduct during working hours and in the workplace. Having said that, there are limits. See for example Sidhu v Aerospace Composite Technology Ltd, 16 where the abuse complained of took place at a social function organised by the employer but which was held to lack the necessary connection with employment. The Statutory Defence 21. An employer fixed with vicarious liability under discrimination legislation may avail itself of the statutory defence if he can show: that he took such steps as were reasonably practicable to prevent the employee from doing that act, or from doing in the course of his employment acts of that description. 22. The defence is usually difficult to make out. It is for the tribunal to decide what steps are appropriate. Comprehensive equal opportunities policies, training and monitoring are the minimum requirement, but merely having a policy will not be enough. In Enterprise Glass Co Ltd v Miles 17 it was held that merely giving an oral warning was insufficient. It is theoretically possible to show that there was 15 [1999] IRLR 81, EAT 16 [2000] IRLR 602, CA 17 [1990] ICR 787, EAT

11 nothing, in practice, which the employer could do 18, but it seems difficult to envisage a case where such an argument would succeed. November See Balgobin and Francis v London Borough of Tower Hamlets [1987] IRLR 401, EAT