Legal

When can employers be held vicariously liable?

28 Apr 2020 By Yvonne Gallagher

Yvonne Gallagher explains the implications for businesses of a recent Supreme Court judgment in a case against Barclays

The law of vicarious liability – under which an employer can be liable for the acts of others where these cause harm – has very clearly applied in relation to employees for many years, and the only areas of doubt that have typically arisen have related to situations whereby employees either broke their employer’s rules or stepped outside the proper performance of their duties in a manner that injured other people.  

Examples over the years include cases where an individual who was barred from carrying passengers in his work vehicle crashed, causing injury to an unauthorised passenger and, more recently, cases of individuals acting violently towards their fellow employees or customers of the employer’s business.

However, the claim in a case against Barclays went further, as the claimants, who were all employees or former employees of Barclays, sought to hold the bank liable for the actions of a doctor to whom they had each been sent by Barclays for medical examinations. The doctor committed sexual assaults on a number of those sent to him by the bank.

There was no suggestion that the doctor had ever been an employee of Barclays. He practised independently as a doctor and part of his business consisted of providing workplace medical examinations for new recruits of Barclays. These examinations were carried out at the doctor’s home, not at any Barclays premises. Beyond instructing the doctor to assess the fitness of the individual to accept employment, Barclays did not control or supervise the doctor.  

Nevertheless, the High Court and the Court of Appeal held that Barclays was responsible for the wrongdoing of the doctor. The doctor died in 2009 and the claims were brought in 2015, meaning Barclays was the only party against whom the individuals had a viable financial remedy.  

The Supreme Court noted that there has been a widening of the nature of the relationships that can give rise to vicarious liability, and that, in some cases – for example, those involving clergymen – the courts have been willing to impose vicarious liability in a wider range of relationships. The language ‘something akin to employment’ had been used in one previous case as a benchmark.  

In this case, however, the Supreme Court noted that, until recently, individuals categorised as employees would be regarded as employees for all key purposes (ie, employment law, tax and social security obligations and vicarious liability). That consistency was broken by a number of recent cases in which individuals might be regarded as being equivalent to employees for one purpose but not another. While recognising that there might be some value in a level of ‘tidiness’ about these arrangements, the court stated that it would be going too far to align the concept of vicarious liability of employees, which was developed for one set of reasons, with the concept of ‘worker’, which includes some but not all employment rights, and was developed for another purpose entirely.

On the specific facts of this case, it was clear to the Supreme Court that the doctor was an independent contractor who carried out business on his own account. Working with such an individual should not create vicarious liability for a client, who has no control over the way in which the independent contractor supplies their services.

This case serves to narrow the risk to employers of finding themselves liable for third parties to whom their employees are exposed in the course of their duties. The scope for this could have included #MeToo allegations where individuals encountered abuse or wrongdoing in the course of their employment from people not employed by their employer.

It may be that, in time, parliament will seek to impose vicarious liability for workers as well as employees, but that is not the position now.

Yvonne Gallagher is a partner in the employment team at Harbottle & Lewis

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