Vicarious Liability: The Liability of an Employer

An individual who employs other individuals in the course of business is subject to various duties in relation to their employees and other third parties during the course of that employment. In certain cases the employer will in fact held to be liable where their employee has committed an act which has harmed a third party.

Full Liability – Authorised Act

If an employee has committed a wrongful act which was authorised by the employer and subsequently has harmed a third party then the employer will be said to have full liability to the injured party. However, when it is not clear whether the act committed by the employee was authorised the details of the case need to be examined in more detail.

Vicarious Liability

What is Vicarious Liability?

Vicarious liability is governed by the law of tort meaning that it is dealt with in a civil court and is concerned with a claim between individual parties as opposed to the state bringing a claim against an individual party.

It is made up of the following scenario:

If an employee commits a wrongful act against a third party while undertaking his employment the employer will be said to be vicariously liable for the act committed by his employee. The employer will then be treated as if he had also committed the act. This means that in the case of vicarious liability the third party is able to bring the claim against both the employer and the employee.

Employee

How do we define an employee? 

An employee is someone who undertakes to do work for another person under a contract of service.

Contract of Service

In order to establish whether there is a contract of Service in place there are various different kinds of test which can be undertaken.

  • The Control Test

This is said to be where the employer has decided how the work should be carried out rather than simply telling the employee just what has to be done. In this case the actual method has been stipulated.

  • The Integration Test

If the employee’s work is considered to be integral to the operation of the business then the person who committed the act while doing the integral work will be considered to be an employee.

  • Economic Reality Test

If the person who committed the harmful act does not assume any economic incentive or economic risk in committing the act then that individual will be held to be an employee.

Employer

How do we define an employer? 

It is much easier to define an employer than an employee as it is simply that person that the employee is working for, i.e. that person who pays him and instructs him in the course of his actions.

Once we have established the employer employee relationship how do we establish vicarious liability?

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For more information on:

  • The Course of Employment Test – Original Test
  • The Close and Direct Connection Test – The newly established test
  • Criminal Acts
  • What if my employee commits a criminal act?
  • Independent Contractors
  • Contract for Services
  • How do we know if an individual is an independent contractor and not an employee?