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Basics of Vicarious Liability

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Basics of Vicarious Liability

Post by assassin on Fri Mar 23, 2018 2:18 am

Vicarious Liability in English Law

Vicarious Liability under English law pertains only to English law, but its principles are used in many other countries; but in England they are much more stringent.
Vicarious Liability in English law is a doctrine of English tort law that puts strict liabilities upon employers for the wrongdoings of their employees and in general an employer will be held liable for any tort or wrongdoing committed by any employee engaged on their company business.
Over the years these liabilities have expanded in response to new legislation of intentional torts such as sexual assaults or fraud and deceit being a few examples and substantial case law confirms this. Historically the employer was always liable for any tort committed by an employee while in his employment and acted inappropriately, but things have changed.

If we look at a well documented example we can take the PPI sold by banks on their loans, their employees sold PPI by fraudulent means, some just included them as a matter of course without even asking the lender if he wanted it, hence vicarious liability and the banks paid compensation. But why? It is common under tort law the policy reasons should allow people injured access to compensation, and employers have deeper pockets and more assets than the individual to claim against or distrain if this is necessary to offset any losses to the injured party.
This is normally called Deep Pocket Compensation as the business has deeper pockets than the employee; which means they have the financial means, and assets if necessary to be distrained (seized and sold) to pay compensation to an injured party.
Secondly, it is under the instructions of an employer by which a tort is committed and the employer can be seen to gain from this action, and expose another to a loss; so they alone must bear any consequences from this gain, or causing another a loss.
Thirdly, it has seen to be a justified way to reduce the risks taken by employers in their business dealings and ensure that adequate protections are taken in them conducting their business dealings.

Establishing Liability

Employers are strictly liable for torts committed by employees under their command and when they are under his control as his employees; and any court must establish sufficient relationship to this affect when issues of vicarious liability are raised.
Judicial statements have concluded there is no one standard test which can establish vicarious liability as each case is unique and individual, but several similarities have been established:

A servant is a person who is subject to the command of his master as to the manner in which he shall do his work.

Historical tests centred around finding control between an employer and a supposed employee in the form of a master, servant relationship. Now it would be determined by simple tests such as finding out if the employee is employed by the company and under what terms, conditions, and company policies they operate.

Contractors differ slightly as they are not always under the control of the organisation they are contracting too, hence why Governments regularly use contractors for many services they provide; basically it reduces the chances of them being held liable under vicarious liability. Where a contractor is used it needs to establish whether the contractor operated to specific tasks, how it carried out those tasks, what tasks it carried out, and if they were stipulated by the organisation they were contracting too. If this can be established then vicarious liability applies to the organisation they contract to as the employer/employee relationship is established as the organisation is controlling how the contractor operates and sets the parameters as to how and when it carries out those tasks.

If a contractor is employed to take on a specific task and no specific orders are issued to how the contract is undertaken, the contractor chooses his way of undertaking the task and uses his own methods to complete the task then there is no employee/employer relationship. In simple terms the contractor issues a proposal to undertake the task, the organisation wanting the task undertaken agree to the contractor’s proposal then there is no master, servant relationship.

However, if an employer commissions a contractor who commits a tort then they can become joint tortfeasors; particularly where the employer is negligent in selecting a competent contractor. Other legislation may also influence this, such legislation may be the duty of care all employers have as these are a non-delegable duty by which all organisations have to comply; or where any non-delegable duty is passed to a contractor by an employer as this is a criminal offence. Common Law duties may also arise, as many various Acts and Statutes under Health & safety legislation for example would apply, and the principle (employer) has a duty to ensure any contractor complies with them, but fail to ensure they comply with their statutory obligations through a poor or flawed selection process.

In simple terms; if the relationship between employer and employee is established and any tort is committed then the employer becomes liable.

There are notable exceptions, if an employee acts to commit a tort outside his lawful employment then the employer cannot be held liable as it is something the employer has not ordered, and the employee has committed outside his normal employment. Here it has to be established that the employee is acting within his scope of employment or not.

One example would be someone working normal 9-5 office hours, he goes out at 7pm and begins drinking and after a couple of hours he becomes drunk and aggressive and assaults someone; this cannot be described as something the employer cannot be held liable for. If the employee drinks at dinnertime and assaults another employee in the afternoon at 3.00pm then the employer is liable as the employee is at work and doing his employment duties. The employer has a duty of care to other employees and should have removed the employee for being drunk under Health & Safely legislation before he became aggressive and committed the tort.

Another example may be that a company employee is asked by his superior to pick up another employee and they are involved in an accident and the passenger is injured, there is a clear order and a clear action by the employer, so they are vicariously liable. If an employee is specifically told that nobody other than company employees are allowed to travel in company vehicles, and it is clearly stated in company policy; and he picks up his wife from work and they have an accident and she is injured then there is no vicarious liability. He is specifically told that he cannot use a company for non company employees, and as a vehicle driver he should know the company policy, then he clearly ignored them and acted under his own volition and ignored both a direct order and company policy so no vicarious liability.

Fraud

Employers have been responsible for fraudulent misrepresentations of their employees since the mid 19th century and in the mid 20th century this was extended to include and cover fraudulent actions as well as fraudulent misrepresentations.
Fraud differs slightly as it also includes any actions which are closely related to an employees employment, and not directly as a result of their employment. This can be demonstrated by someone working in an office with access to numerous credit card details and they take these details away from work and draw monies by using this information to commit the tort of theft. This is closely related to their employment by virtue of the fact that during their employment they had access to this information and were allowed to remove this information from the company premises to allow it to be used in a tort of theft or fraud. Employers would be held vicariously liable as they failed to employ a suitably trustworthy employee for the position of trust, and their policies and procedures allowed an employee out of their place of employment with such information. In addition to this the information would have been copied and taken during working hours, and there were inadequate procedures in place during working hours to prevent these torts.

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