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Vicarious Liability of Employers

Vicarious liability means one party can be held legally responsible for the actions of another party. The situation is one of strict liability, which means there is liability without proof of fault. Relationships in which a party may be liable vicariously include contractors and sub-contractors, where a sub-contractor fails to complete a job. However, vicarious liability is most commonly associated with the relationship between employer and employee, and that is the focus of this article. An employer can be liable for negligent acts or omissions by an employee “in the course of employment”, regardless of whether there is permission for the action.

Vicarious liability is additional to the liability of an employee for negligence; employer and employee are liable “jointly and severally”. Under common law, an employer is entitled to recover from an employee a contribution to damages or to be fully indemnified by an employee if the employer is not negligent.

Whose conduct is covered?

An employer could be held vicariously liable for wrongful acts of:

  • individual employees or groups of employees;
  • workplace participants (where people work on the same premises but have different employers);
  • workers on contract or being paid a commission;
  • agents;
  • members of organisations which certify employer qualifications;
  • trade union representatives;
  • employment agency representatives.

This liability can extend to actions at employer-sponsored events such as training workshops, social functions such as Christmas parties, and business or field trips. It can also include when technology connected to the workplace is used by an employee for wrongful purposes, such as harassment of a person via social media, or the sending of threatening emails.

Is there a defence?

To defend a claim, an employer needs to prove that the employee was not negligent or was acting in their own right rather than on an employer’s instructions. The test for vicarious liability examines the connection between the nature of employment and the wrongful act in deciding whether it is just and reasonable to hold employer vicariously liable.

How is vicarious liability governed?

Vicarious liability is created by both legislation and common law. It is defined explicitly at a Commonwealth level in Section 18A of the Racial Discrimination Act 1976 and Section 106 of the Sex Discrimination Act 1984. Each statute states that when an employee or agent of a person does an act in connection with their employment, and that act is unlawful, “this Act applies in relation to that person as if that person had also done the act”. An exception is when “the person took all reasonable steps to prevent the employee or agent from doing the act”.

What are “reasonable steps”?

“Reasonable steps” taken to avoid vicarious liability will be determined on case-by-case basis. Such steps taken by an employer can include implementing workplace policies and training that address discrimination and harassment, and establishing an internal complaint-handling process.

In deciding preventative measures, an employer should consider such factors as:

  • the size and structure of the workplace;
  • and type and nature of work;
  • the demographics of employees;
  • the level of employee supervision;
  • previous wrongful acts by employees;
  • industrial awards and agreements.

Is an employer liable where the employee’s conduct is criminal?

In the 2003 case of New South Wales v Lepore & Anor, a matter involving sexual abuse by a priest, the High Court ruled that an employer could be liable only where the assault had occurred “in the course of employment”.

However the 2016 High Court case of Prince Alfred College Incorporated v ADC established the “relevant approach” test, which states that the fact an employee’s act is a criminal offence does not absolve the employer of vicarious liability, and that employment could provide circumstances for commission of the offence.

The South Australian Supreme Court had ruled that a school could not be held liable for the sexual assault of a student because the crime was “so far from being connected to (the offender’s) proper role that it could neither be seen as being an unauthorised mode of performing an authorised act, nor in pursuit of the employer’s business, nor in any sense within the course of (the offender’s) employment”.

In the ensuing High Court appeal, their Honours stated:

“(In) cases of this kind, the relevant approach is to consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. In determining whether the apparent performance of such a role may be said to give the “occasion” for the wrongful act, particular features may be taken into account. They include authority, power, trust, control and the ability to achieve intimacy with the victim. The latter feature may be especially important. Where, in such circumstances, the employee takes advantage of his or her position with respect to the victim, that may suffice to determine that the wrongful act should be regarded as committed in the course or scope of employment and as such render the employer vicariously liable.”

For assistance with vicarious liability, or for legal advice or representation in any legal matter, please contact Armstrong Legal.

Sally Crosswell

This article was written by Sally Crosswell

Sally Crosswell has a Bachelor of Laws (Hons), a Bachelor of Communication and a Master of International and Community Development. She also completed a Graduate Diploma of Legal Practice at the College of Law. A former journalist, Sally has a keen interest in human rights law.

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