Passing the buck

The liability of an employer for the negligence or wrongdoing of the employee or independent contractor has been a problem in the common law since anybody can remember. It has generated too much case law and we now have two more Supreme Court rulings on the issue. 

The judges at the highest level have the benefit of reading through all the papers, sitting through the hearing, studying all the cases and the judicial nuances, and write up the judgment at their leisure – but busy practitioners need some straightforward guidance to enable the legal problem to be identified; to understand and apply the principles; and then negotiate and settle with confidence. 

Hopefully, the latest Supreme Court cases should provide the guidance needed. In ?Various Claimants v WM Morrison Supermarkets plc [2020] UKSC 12 the employee was authorised to disclose particulars regarding all the employees in the course of a restricted internal audit.

The employee harboured a grievance or a grudge against the employer and, in pursuance of a sort of vendetta or act of revenge against it, made an improper and, indeed, criminal public disclosure of the particulars. This caused considerable damage to employees. The damaged employees sued the employer.

The case raised a number of issues, including: 

• Was the conduct of the employee ?closely connected with the acts that the employee was authorised to do? 
• Was he acting within the field of his ?authorised activities? 
• Was there a sufficient connection? 
• Was he acting in the ordinary course of his employment? 
• Was he furthering the business of the employer? (Merely taking advantage of an opportunity presented by the employment is not enough).
• Could the acts of the employee fairly and properly be attributed to the employer? 
• Was what happened a seamless episode in an unbroken series of events when the employee was working at his job? 

Although the statement of the applicable principles is clear, and must be argued by the advocates, the judge has to bring an evaluation process to his decision. The judge must weigh and balance the arguments and decide upon the stronger case.

Whereas the judges used to be ready to hold the employer liable for the conduct of their employees, today they seem much more reluctant, especially where the employee has been acting criminally. Employers should bear the risks of business, but not including the risks of the employee going way beyond their authority, because that would be unreasonable ?and unfair.

Thus, the sexual abuse of a pupil by a school teacher has been held to have occurred in the course of employment, that is while ‘caring’ for the pupil – albeit in a wholly unacceptable manner. Today, such a result must seem to be on the line dependent on the particular facts. 

Then there is the fraud committed upon the customer or the fellow employee, for which the employer has been held to be ?liable. This is also dependent on the particular facts of the case.

The petrol station employee who, without justification, used foul, racist and threatening language against a customer and ordered him off the premises was doing exactly what he was employed to do, namely serve the customer. But unfortunately, on that occasion he was acting in a wholly improper manner, and the employer was held to be vicariously liable [Morrison [para 21-30]).

By contrast, in Morrison the criminal disclosure of sensitive confidential information regarding fellow employees by the employee, acting out of a sense of vengeance or vendetta and not furthering the business of the employer, did not cast vicarious liability upon the employer. 

The judges seem to be taking a less strict and more protective attitude toward the employer. Over the years there are detectable shifts in attitudes and approaches by the judges in the highest courts: sometimes they seem to favour employees, sometimes employers. Judges reflect current social thinking. 

Independent contractors

Prima facie the employer is not liable for the acts of the independent contractor because ex hypothesi the contractor is independent. In Various Claimants v Barclays Bank plc [2020] UKSC 13, the defendant bank recruited a number of young women, offering them employment subject to passing a medical fitness examination by an independent doctor. 

The recruits passed the examination and were employed but, regrettably the doctor sexually abused these young women during their fitness examinations. The bank was not found to be vicariously liable to the claimants. 

However, there may be situations where the employer may be liable. To render the employer liable, the five relevant policy principles for liability are, to paraphrase: 

• The employer has the means to compensate the damaged employee and can be expected to be insured.
• The tort will have been committed as ?a result of activity taken on behalf of ?the employer.
• The activity is likely to be part of the business activity of the employer.
• The employer will have created the risk.
• The employer will, to a greater or lesser degree, have been in control of what the independent contractor was instructed to do.

So the questions raised in such cases are: was the independent contractor acting on his own account or within a relationship akin to employment? Were they acting in effect in their own business or that of the employer? What was the degree of control, if any, exercised by the employer? 

Thus where the independent contractor was a doctor, instructed by the bank for a fee for each case to carry out a medical fitness examination on new recruits, sexual abuse had absolutely no part in such work. The employer was not, therefore, vicariously liable.

The traditional difference between the position of the employee and the position of the independent contractor still remains. The bank-doctor relationship could not be said to be akin to employment; the doctor was brought in from time to time for a particular limited purpose. 

Similarly, the bank would not have been liable for sexual abuse of its employee/s committed by the outside window cleaner, or by the outside accountant called in to do the books for the annual financial assessment or tax return. So pinning liability on the employer for the negligence or wrongdoing of the independent contractor remains difficult. 

Key lessons

What approach should practitioners take? The solicitor should ascertain the facts, interview the relevant individuals, read all the statements, study the contract of ?employment (or whatever arrangement there was between the parties) and check any insurance.

They should also look into the practice and custom in the particular business – and indeed, generally in that sort of business. Think about whether what happened has ever happened before; chat discreetly with a friend who might happen to work in that sort of business.

Also, see what guidance the relevant trade association may offer; and if there may be any technical matters involved, try the British Standards Institute.
You should also consider, for instance, whether there have been any disciplinary proceedings and whether there have been any court proceedings – especially criminal proceedings.

In other words, the solicitor should bring their best skills and experience and insight to bear.  

Alec Samuels is a barrister