Vicarious liability occurs when an employer becomes liable for negligent acts or omissions by their employee ‘in the course of employment’, regardless of whether the employer permitted the employee’s actions.
Employers must ensure their employees always act in a safe and reasonable manner whilst ‘in the course of employment’. This is referred to as ‘strict liability’, which means that employers are liable for their employees’ actions regardless of whether it was the employer’s fault.
Vicarious liability is mostly associated with the employer/employee relationship. It addresses two key matters – the employer’s duty of care to its employees, and the employer’s responsibility for the acts or omissions of its employees.
What is meant by ‘in the course of employment?’
For an employer to be held vicariously liable for the negligent action of an employee, the negligent action must have a substantially close connection with the work for which the employee is required to perform for the employer.
For example, an employer may be vicariously liable for an employee builder who inadvertently leaves a ladder unsecured which results in another employee falling off the ladder. In this situation, the failure by the employee to secure the ladder would fall within the ‘course of employment’.
‘Employees’ may include workers who are not necessarily employed by the employer, for example, agents, workers on a contract or commission-based workers, and union and employment agency representatives.
In some cases, conduct that occurs outside of the workplace or outside of work hours may still be sufficiently connected to the employment, thus making the employer vicariously liable.
Can an employer be held vicariously liable for criminal actions of its employees?
The answer to this question will depend on whether there was a sufficient connection between an employer’s actions/omissions contributing to a risk of the occurrence of a criminal act and the employee’s criminal act, for example, sexual abuse of a pupil by an employed teacher where the abuse was committed in the course or scope of the teacher’s employment.
Vicarious liability of an employer is decided on a case-by-case basis as to the role and nature of responsibilities when determining whether a job provided an opportunity for an employee to engage in wrongful conduct.
If you have suffered an injury from a fellow employee’s criminal actions and are not sure whether you can claim compensation from your employer, we recommend you seek legal advice as soon as possible.
Vicarious liability and discrimination claims
Employers must show that they have taken reasonable steps to prevent discrimination or harassment from occurring in the workplace if they want to minimise liability. If they cannot show they have taken such steps, employers may be held vicariously liable for the discriminatory or harassing conduct of their employees and included as a party with the employee against whom a complaint is made.
In such cases, employers may be ordered by a court to pay compensation to employees who have been sexually harassed or discriminated against in the workplace (by another employee) when such conduct causes anxiety, depression, and other psychological effects. Employers may also be ordered to pay compensation for economic loss if an employee leaves their employment because of the harassment and/or discrimination.
Employees may complain to the Australian Human Rights Commission (AHRC) within 12 months of when the harassment or discrimination occurred.
The AHRC may investigate and conciliate the employee’s complaint to see if a settlement can be reached. If a settlement is not reached, the complainant has a prescribed time limit to take the matter further with a relevant court in the federal jurisdiction.
Similar processes exist in state and territory jurisdictions.
If a court determines that unlawful discrimination or sexual harassment has occurred, it may award damages. For example, in a recent case, an employee who was sexually harassed received $100,000 in compensation for the value of loss of enjoyment of life and the mental illness and distress resulting from the sexual harassment and $30,000 for loss of income.
What ‘reasonable steps’ should employers take to minimise vicarious liability for discrimination and harassment?
Generally, employers should implement workplace policies and training that address discrimination and harassment, including an internal complaint handling process.
In implementing these policies, employers should consider factors such as:
- size, structure, and nature of work
- demographics of their employees and level of adequate employee supervision
- whether there have been previous wrongful acts by employees
- industrial awards and agreements that may cover their employees
If you are an employer and want to minimise your risk of paying out compensation for a sexual harassment claim, we recommend you speak to an experienced Melbourne employment lawyer.
Conclusion
Vicarious liability means that employers may be held responsible for the ‘wrongful actions’ of their employees ‘in the course of their employment’.
An experienced lawyer can help employers to implement systems and take action to minimise the possibility of being vicariously liable for the actions of their employees.
Similarly, an employment lawyer can help if you believe that your employer may be vicariously liable for an injury received during your employment.
This information is general only and we recommend you seek professional advice relevant to your specific circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (03) 9600 2768 or email [email protected].