How to avoid vicarious liability from self-employed contractors

Sally Gwilliam explains how employers can best avoid liability for the negligence of self-employed contractors

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In the past, businesses contracting with a self-employed worker would not be liable for the contractor’s actions or inactions. However, recent legal developments have created some uncertainty for employers. In some circumstances employers can be liable for the negligent actions of self-employed contractors. This concept is known as vicarious liability and it is the rule of law that imposes strict liability on employers for the actions of their employees.

D&F Estates Limited v Church Commissioners for England sets out the general principle that no liability arises for negligence committed by an independent contractor when carrying out work they were engaged for. This principle was followed in Barclays Bank Plc v Various Claimants where the Supreme Court decided that while a person can be held vicariously liable for actions of a non-employee, the self-employed doctor carrying out pre-employment medical examinations in this case was in business on his own account and the relationship was not sufficiently 'akin to employment' for it to be just and fair to impose liability. The bank was not vicariously liable for the alleged assaults committed by the doctor. 

What type of relationship do you have with your contractor?

Both cases make it clear that if the relationship with your contractor is less like an employee relationship, it is unlikely that you will be vicariously liable for the actions of that contractor. As an employer you can carry out a two-stage test to see if you could be liable for the actions of your contractor:

  1. is there a relationship between the consultant who has committed an offence and your business, that could result in vicarious liability?; and

  2.  is the employment connected with the wrongful act or omission? 

If the answer is yes, liability for your business is more likely.

However, businesses should be aware that even if they avoid being vicariously liable for the actions of their contractors, they could still have a ‘non-delegable duty’ of care. If this is the case, there is no defence to delegate work to someone you reasonably believe is competent to carry out that work and in which case you could still be liable as a result of your independent contractor’s negligence. 

In Woodland v Essex County Council five factors set out what needed to be satisfied to impose a non-delegable duty: 

  • if a claimant is vulnerable or dependent on the defendant’s protection; 

  • the relationship places the claimant in the defendant’s care (eg, a patient/doctor relationship);

  • where the claimant has no choice over how the defendant performs the obligations;

  • where the defendant has delegated an integral part of the duty to the claimant; and

  • the third party is exercising the defendant's care of the claimant and is negligent in performing the delegated function.

Recently, in Hughes v Rattan, a dental practice owner was found to owe patients a non-delegable duty of care, even though the dentists were self-employed, as the five factors in Woodland were satisfied. The court was not required to decide whether the dental practice owner was also vicariously liable for the self-employed dentists’ actions but expressed that he would not be vicariously liable because the test in Barclays was not met.

On balance, the relationship was not ‘akin to employment’, so the dental practice owner could not be found vicariously liable. While vicarious liability is unlikely in a genuine contractor relationship, businesses operating in healthcare settings should be aware they could be held liable for negligent contractors, where there is a non-delegable duty. 

How do I protect my business? 

Be clear on the employment status of those working for your business. If you are unsure if you are hiring an employee, worker or self-employed contractor, seek legal advice to fully understand your obligations and potential liabilities. 

Make sure you implement a rigorous recruitment process, if the person you hire is competent and professional you will reduce the likelihood of liability for your business. 

Ensure clear and comprehensive written agreements exist with self-employed contractors and that those agreements, and the way the contractors carry out their work is consistent with a self-employed contractor. If you may have a non-delegable duty or are unsure about working arrangements, seek professional advice.

Sally Gwilliam is a senior employment law solicitor at Harper James