We generally think of crime in a linear way. A person is accused of a crime, is arrested, goes on trial, and is sentenced and punished. However, there are more complex cases where more than one person can be held liable for the actions of an individual.
This is most commonly seen in business, where an individual’s employer can be held responsible for alleged discrimination or harassment which happens on the company’s property, or while the employee is doing their job. This is a form of strict liability which is known as vicarious liability, where one person or company is held liable for the acts of another person, despite that person or company not committing the act themselves.
It is essential that a business owner is not only aware of this legal premise, but understands how to avoid vicarious liability by implementing the appropriate procedure in the workplace and taking out liability insurance.
What is Vicarious Liability?
Vicarious liability refers to the legal responsibility that an employer bears for the actions of their employees while working on their behalf. To be liable means to be legally responsible, and vicarious refers to acting through another.
Vicarious liability has two essential characteristics:
- the liability for the wrongdoing of others
- liability without proof of fault, otherwise known as strict liability
Examples of Vicarious Liability in the Workplace
There have been many cases involving vicarious liability all over the world but there have a few prominent ones in Australia including:
Leslie v Graham (2002)
In 2002, the Federal Court of Australia found an employer vicariously liable after an employee sexually harassed a colleague whilst in a shared apartment on a work trip where they were to attend a work conference.
Lee v Smith (2007)
Another employer was found vicariously liable after an employee was raped by another employee after a work-related event at another colleague’s house. The magistrate found that a history of harassment within the workplace developed into a pattern that culminated in the horrific offence.
Historical Case against Prince Alfred College (2015)
The concept of vicarious liability was brought back into the forefront of public opinion in 2015 after a Supreme Court judge ruled that Prince Alfred College could not be held vicariously responsible for the historical case of the sexual abuse of a 12-year-old border committed by housemaster Dean Bain in 1962. Justice Ann Vanstone reached that decision by acknowledging that Prince Alfred College’s response was “in accordance with the time (the 1960s).
Who Can Be Held Vicariously Liable?
Employers can be held vicariously liable for any discrimination, harassment, sexual abuse, or other kinds of wrongful acts such as a situation in which an employee takes advantage of another, that takes place at work, seminars, conferences, Christmas parties, work-related social functions, or business or field trips. This is known as secondary liability, as the employer did not commit the act, but perhaps, through a series of negligent acts, can be considered responsible.
Such circumstances are particular features within the business world where different employers are in charge of many individual employees and subcontractors who they are deemed responsible for.
Whose Conduct is Covered?
Employers can be held responsible for acts of discrimination that take place within a workplace, or an event or situation that is connected to someone’s employment. An employer may be held vicariously liable if the aforementioned acts by the following employees, partners, agents, or other workplace participants:
- Employees, managers, supervisors, and directors
- Agents affiliated with the company
- Contractors paid by the company
- A partner of a company harassing another partner
- workplace participants who work within the same premises but have different direct employers
- Members of an organisation that grants occupational qualifications
- A member of a trade union who is harassing another member
- An operator of an employment agency who harasses an individual who uses that agency
Where Does Vicarious Liability Apply?
An individual is directly responsible for their conduct if they harass, or discriminate against somebody in the workplace. Where vicarious liability applies to companies is when they have not demonstrated that they have taken reasonable steps to prevent discrimination or harassment from taking place. In this situation, the individual and the employer may be held jointly liable.
What are the Elements of Vicarious Liability?
Vicarious liability applies to a wide range of circumstances, from neglectful parents to the employer-employee relationship, and more. Wherever a party is overseeing or reasonable for another, vicarious liability may potentially be applied. Elements of vicarious liability which must be considered include:
- An employee has created a material, emotional, or physical loss to another during work
- The employee was acting within the range of employment
- The employee has been empowered by the employer to carry out tasks
- The employer did not warn the employee of their harmful conduct
- The employer will hold accountability for their employees as they have engaged the defendant
- Finally, although not strictly related, vicarious liability also may apply to parents who can be held liable for the actions of their child
Can Employees Be Held Responsible for Vicarious Liability?
Whilst vicarious liability is most commonly associated with employers, it can also apply to employees who are negligent or engage in misconduct over the course of their duties in a workplace. In certain cases, employers can avoid being held liable if they prove they took all reasonable steps to prevent harm, and in others, both employers and employees can be held jointly responsible for certain conduct.
What Does ‘All reasonable steps’ Mean for Employers?
“All reasonable steps” is a broad and somewhat ambiguous legal term that refers to the employer implementing the right course of action both before, during, and after the alleged offence in order to minimise harm. These actions can include policies, training, sophisticated human resources procedures, and efficient handling of internal complaints. Because of its ambiguity, the “all reasonable steps” clause is determined on a case-by-case basis, as what is reasonable for a large corporation may not be reasonable for a smaller business.
Factors such as size, structure, resources, geography and history of sexual harassment, among others, are all considered before a decision is made regarding the employer’s culpability.
What is an Example of Vicarious Liability?
An unfortunately common example of vicarious liability is one in which an employer fails to prevent sexual harassment or inappropriate work conduct within the workplace. One party may make repeated sexual advances, jokes, comments, or play inappropriate practical jokes on another and if an employer does not take reasonable steps to prevent, dissuade, or hold the person responsible, they may be held legally responsible.
Vicarious Liability Laws and Penalties
According to the Law Reform (Vicarious Liability) Act 1983 No. 38., a master (employer) is vicariously liable in respect of a tort committed by the master’s servant (employee) in the performance of an independent function where the following applies:
(a) is in the course of the servant’s service for his or her master or is an incident of the servant’s service (whether or not it was a term of his or her contract of service that the servant perform the function), or
(b) is directed to or is incidental to the carrying on of any business, enterprise, undertaking or activity of the servant’s master.
Vicarious Liability Defence Examples
The primary defence for vivacious liability is to prove that the employer did not behave negligently, and that reasonable standards of conduct were in place, and that reasonable steps were taken to deal with the situation. In order to defend a vicarious liability defence, you must be able to prove that there is no connection between the alleged offence and the nature of the employment.
Requirements to Qualify for the Defence
There are two main actions that employers must take to avoid liability for sexual harassment:
- Take all reasonable steps to prevent sexual harassment from occurring. This should include a sexual harassment policy, proof of implementation and monitoring of effectiveness.
- Take immediate action to remedy the offence, if committed.
Is An Employer Liable Where The Employee’s Conduct Is Criminal?
After the landmark 2016 Prince Alfred College case discussed earlier, the precedent has changed and now states that an employer can be held liable for an employee’s conduct even if that conduct is criminal, provided that the employment provided the circumstances for the crime to be committed.
However, it is essential to note that an employer is only liable when the offence is conducted in the course of employment. If an employee commits a criminal act outside work hours and outside the workplace, then they are personally liable and the company can not be held responsible.
LY Lawyers and Vicarious Liability
If you or your company are being held vicariously liable for the conduct of an employee or employees, you should speak with an expert criminal lawyer immediately. Most vicarious liability cases are completely defensible provided you have taken reasonable care to establish good work culture and procedures, and employ the right legal strategies.
LY Lawyers offer services for all kinds of criminal matters, including complex corporate crime. We are Sydney’s most trusted criminal lawyers and have offices throughout NSW. Call LY Lawyers on 1300 595 299 or contact us online to book your free consultation today.