What is Vicarious Liability?

Every employer wants their staff to act respectfully, both in and out of the workplace. But if an employee's actions fail to meet expectations, then you may be found vicariously liable.

If you cannot prevent an incident from happening, you could face claims of vicarious liability. This can lead to financial strain, reputational damage and increased employee turnover.

In this guide, we'll look at what vicarious liability is, what employers need to know and how to prevent and reduce the risk.

What is vicarious liability?

Vicarious liability, or imputed liability, is when another person or employer is held responsible for harmful or discriminatory acts committed by their employees. An employer can be held liable for these acts even if they disagree with the employee’s actions or conduct.

Although it often involves this dynamic, vicarious liability is not just limited to the employer-employee relationship. Placing liability is simply a conclusion of common law based on the facts of the case.

What is the difference between full and vicarious liability?

Full liability and vicarious liability are two different legal concepts. Full liability means that a person or party is held solely responsible for their actions. They may then need to compensate any victims and pay potential legal fees.

Employers can be held fully liable if they are directly involved in wrongful acts. For example, ignoring health & safety risks or allowing discriminatory behaviour. This same strict liability may also apply if they expressly authorise or encourage wrongful acts committed by an employee.

Vicarious liability means that a party is responsible for the acts of another. Even if they were not involved or encouraged the act they can still be liable. This legal doctrine is often ruled when an employee causes an accident or commits harm 'in the course of employment'.

The reasoning is that the responsible party should have power to control the actions of the person committing the act. Therefore they are responsible for the act or omission.

What does 'in the course of employment' mean?

In the course of employment refers to acts committed while an employee is working for a business.

Employers can be held responsible for acts committed during working hours or within the workplace. However, case law has shown that employers can sometimes be liable incidents outside of the workplace. For example, commuting to and from work or at social events like Christmas parties.

Can business owners be held vicariously liable for independent contractors?

Employers are most commonly vicarious liable for employees and workers. But on rare occasions, an employer can be held liable for the actions or injuries resulting from an independent contractor.

A contractor operates as a separate party and is liable for their own actions. Business owners rarely control the work or processes taken by contractors. Instead, they will provide their own materials, tools and workers to complete a job. This means that any negligence is their responsibility and not the employer's.

However, there are some exceptions to this rule. An employer's business may be held vicariously liable for a contractor's negligence if:

• The business hired a contractor who's incompetent or unqualified.
• The work the contractor was hired for is dangerous.
• The business failed to fulfil a duty it couldn't legally give to the independent contractor.

As a business owner, you need to ensure that all your independent contractors are fully vetted. Otherwise you could find yourself held liable for their actions.

Legal tests to prove vicarious liability

Employers have a responsibility towards various claimants. However, under UK employment law, to be found vicariously liable a court must consider a few factors.

This is done by carrying out two legal tests. These are:

• The relationship test: This is to prove whether a relationship exists between the employer and employee. This can prove whether they are responsible for the wrongful act and if the employer's business is liable.
• The close connection test: A court must be able to establish a sufficient connection between the employer and the culprit. This means that the wrongful actions must be related to conduct on the authority of the company or employer.

If either of these are proved then an employer may be guilty of vicarious liability. They can then be taken to an employment tribunal.

Examples of vicarious liability

Vicarious liability is held responsible for an incident, injury or accident. That's why employers need to be aware of all potential factors and circumstances that could leave them liable.

Let explore some common examples of vicarious liability.

Discrimination claims

Under the Equality Act 2010, employees are protected against discriminatory acts relating to nine protected characteristics.

These are:

• Age.
• Disability.
• Gender reassignment.
• Marriage and civil partnership.
• Pregnancy and maternity.
• Race.
• Religion or belief.
• Sex.
• Sexual orientation.

If you fail to prevent an employee, worker, customer or client experiencing a discriminatory act, then you could face vicarious liability.

Bullying and harassment

Everyone should be able to come to work without fear of bullying and harassment.

If they do experience this treatment from other colleagues or customers then you may be found vicariously liable. Especially if you have failed to put adequate measures of control in place to prevent it.

Health & Safety accidents

Accidents happen. But you can mitigate a lot of risk by carefully managing risk in the workplace.

As a business owner, you should implement and manage certain safety practices. This can help avoid risk to employees and help keep them safe and protected while working.

If you as a business owner fail to prevent certain risks you could face vicarious liability claims for not preventing accidents or incidents. Especially if someone is injured as a result of your actions. Depending on the severity of the incident it may be classed as a severe breach of Health & Safety.

Illegal activity

Employers can sometimes be found liable for crimes committed by their employees. If the crimes occur during the course of employment or in the workplace, then the company owner may be held accountable.

Even if they are unaware of the circumstances of the harmful actions, the supervisory party can still be held legally responsible.

How to avoid vicarious liability

By taking reasonable steps to prevent certain actions, you can limit your liability.

There are two main steps that an employer can take to reduce the chances of being held vicariously liable. These are:

• Creating company policies.
• Offering employee training.

Let's explore these in further detail:

Creating company policies

Employers implement policies for all sorts of reasons. A well written set of company policies can help make employees aware of what is expected of them. They can also highlight what is considered inappropriate or gross misconduct.

Policies can also outline the steps taken in disciplinary and grievance procedures. Or an example on how to properly supervise a job to avoid health & safety risks.

By having such steps in place, you can prove that you have purposely taken measures to avoid certain actions or behaviours. If an employee acts against what is expected of them despite clear instructions, then an employer is less likely to be deemed responsible.

Offering employee training

Your employees should receive training to help them fulfil their roles. Staff training can help improve an employee's efficiency, productivity and help them exceed their career goals.

But there are other types of training that business owners should consider. Equality, diversity and inclusivity training can help to improve your company culture and morale.

When employees are happy they work better together leading to less workplace conflicts, higher levels of engagement and a lower risk of vicarious liability claims.

Get expert advice from Peninsula

No one wants to be held liable for something they didn't do. As an employer, it's important that you limit your risk of vicarious liability as much as possible.

Otherwise you could find yourself in court facing hefty legal fees as well as large compensation pay outs. You could also face business reputational damage and a drop in business revenue.

Peninsula offers expert advice on discrimination and vicarious liability. Our HR team offers unlimited 24/7 HR employment services which are available 365 days a year.

Want more information? Seek specialist advice from one of our HR advisors. For further information, call our telephone number 0800 028 2420.