Welcome to: Claims 4 Compensation

Vicarious liability imposes liability on an employer for the negligent acts of their employees when claimants make claims for compensation. To prove vicarious liability, a number of tests must be satisfied. Firstly, the person alleged to have committed the tort must be an employee.

Various tests have been developed in order to determine employee status. The control test is the oldest of the tests, based on a time when master and servant laws applied.

In Yewens v Noakes it was shown that it was based on the level of control the master had over the servant. This was based on the power to select, control and dismiss the servant, as in Short v JW Henderson Ltd. It is difficult to apply this test to a modern setting but can be used for borrowed workers, as in Mersey Docks. This is a narrow test as it only takes into account one factor.

The integration test is based on how integrated the work of a person is to the business, established in Stevenson Jordan and Harrison Ltd v McDonald and Evans. For example, a chauffeur and a newspaper reporter would both be considered integral to the business and therefore employees, whereas a taxi driver and a freelance writer may not be employees because they are not integrated but are merely accessories to the business. Again, this is a narrow consideration but is more useful for modern working environments than the control test.

The economic reality test is a more modern test in which three conditions must be satisfied: the employee agrees to provide work or skill for a wage, the employee expressly or impliedly accepts that the work will be subject to the control of the employer, and all other considerations in the contract are consistent with there being a contract of employment rather than any other relationship between the parties. McKenna J developed the test in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance to determine the lack of employment status and avoid liability, which may be fairer for the employer.

The test has subsequently been modified so that all factors in the relationship should be considered and weighed according to their significance. Factors that may be considered include the ownership of tools, plant or equipment, the method of payment, tax and National Insurance, self-description and level of independence. This is more useful for modern working situations and is fairer for the employer because it is a broader approach that allows a range of considerations to be taken into account. All of these rules are useful in identifying the status of the worker, but none are an absolute test or are definitive alone.

Once it has been decided that the worker is an employee, it must be proved that the tort was committed during the course of his employment. The courts favour the test by Salmond, that the employer will be liable in two instances. The first is for a wrongful act that has been authorised by the employer, hence the liability in Poland v Parr. The second is for an authorised act that was carried out in an unauthorised way. An employer can be liable for such acts in a variety of ways.

It can be where something has been expressly prohibited by the employer, as in Limpus v London General Omnibus Company. This seems unfair because the employer would have tried to prevent the prohibited acts from taking place. It could be where the employee is doing the work negligently, as in Century Insurance Co. Ltd v Northern Ireland Transport Board. Again, this seems unfair because it is not the fault of the employer. However, it could be argued that the employer is responsible for selecting suitable candidates and for providing suitable training, therefore it could be fair if the employer has made a bad decision.

Liability could also be imposed where the employee gives unauthorised lifts contrary to instruction, as in Rose v Plenty. This may be unfair because the employer would have tried to avoid this situation by instructing otherwise, although it may be fair if the internal discipline is ineffective, as this is the responsibility of the employer. Liability could also be imposed where the employee exceeds the proper boundaries of the job, as in Bayley v Manchester.

If the tort was not committed in the course of employment, the employer will generally not be liable. For expressly prohibited acts the employee must have done something beyond his scope of employment for the employer to avoid liability, as in Beard v London General Omnibus Co. This may be fairer than the decision in Limpus, which initially seems very similar. An employer will not be responsible where the employee is on a frolic of his own, as in Hilton v Thomas Burton (Rhodes) Ltd, which seems fairer for the employer because it is beyond their control. Giving unauthorised lifts may also prevent liability, as in Twine v Beans Express. The case facts are similar to Rose v Plenty, although the decision may have been different because of policy reasons, as the hitchhiker was not a benefit to the company, unlike the boy in Rose v Plenty, which may be a better deterrent. Acts exceeding the proper boundaries of the work may mean liability is not imposed, as in Makanjula v Metropolitan Police Commissioner. This is fairer for the employer if the employee does something that could not be described as falling within his work.

The final test that must be satisfied is whether or not the act was a tort. An employee will not usually be liable for the crimes committed by an employee, as in Warren v Henleys. The courts are more prepared to consider that the dishonesty of an employee falls within the course of employment and therefore to impose liability on the employer, which may apply in the case of fraud, as in Lloyd v Grace Smith and Co.

An employer will generally not be liable if the fraudulent activities happen partly in and partly out of the course of employment, as in Credit Lyonnais Bank Nederland NV v Export Credits Guarantee Department. Vicarious liability can also apply in cases of theft, as in Morris v Martin and Sons. This seems unfair to the employer because it is beyond their control and is not part of their work. The Court of Appeal has rejected claims of sexual abuse, as in Tratman v North Yorkshire County Council. The general feeling was that the more extreme the act of the employee, the less likely that the employer would be held vicariously liable, which seems fairer for the employer because it becomes less foreseeable and therefore harder for the employer to control.

The House of Lords developed a newer test based on inherent risk to cover such situations and enable liability to be more easily imposed, considering whether there was a connection between the employment and the tort. This meant that vicarious liability was appropriate in Lister v Hesley Hall, as there was an inherent risk of abuse that the employer should have guarded against. Liability was also imposed in Mattis v Pollock because the tort was closely connected to the work the employer expected of him. The principle of close connection has also been applied in Maga v The Trustees of the Brimingham Archdiocese of the RC Church, therefore liability was imposed because of the sufficient connection between the employment and the tort. This could be unfair to the employer, especially if it is a charity that would find it difficult to pay compensation, although it may encourage employers to be more careful about who they employ.

In some cases the employment was merely seen to provide the opportunity for the person to commit the tort, therefore there was no liability in N v Chief Constable of Merseyside Police. This is fairer for the employer because it is not part of the employment of the worker and therefore cannot be controlled. An employer will not usually be liable for the acts of independent contractors he has hired, which seems fair because of the lack of control. However, if the contractor has been hired for the purpose of carrying out the tort then the employer may be liable as in Honeywell and Stein v Larkin Bros Ltd, and Ellis v Sheffield Gas Customers Co. Liability may also be imposed where the employers are under a non-delegable duty of care imposed by a statute, for example where there is an obligation to provide safety equipment and ensure that it is used, and where a similar non-delegable duty of care is owed in common law, therefore the claimant is more likely to make successful claims for compensation.