Are employers liable for employee actions?

The definition of ‘liability’ in a dictionary.

It’s generally accepted that employers have a duty of care when it comes to their employees. The Employers’ Liability (Compulsory Insurance) Act 1969 states that every employer in the UK is responsible for the health and safety of their staff while they are at work.

This means if an employee is injured at work or they (or a former staff member) becomes ill as a result of their work, they have the legal right to attempt to claim compensation if they believe the employer to be at fault.

However, aside from health and safety in the workplace, are employers liable for anything else, such as their employees’ actions, including potential negligence?

In this article, we explain to what extent an employer in the UK is responsible for their employees’ actions. To do this we will define the legal principle of ‘vicarious liability’ and outline when this legal rule of employment law can be applied. Finally, we will provide key guidance on how your business can financially protect itself, focusing specifically on the business insurance policies you may wish to consider purchasing.

Is an employer liable for an employee's negligence?

Aside from matters relating to health and safety in the workplace, the extent to which an employer is responsible or liable for an employees’ actions is not always clear. This is because, as claims made by employers against their employees are limited, UK courts have had little opportunity to make rulings on such situations, meaning there is little in the way of legal precedent in this area.

That being said, with a small number of high-profile cases involving employer liability in recent years (including WM Morrison Supermarkets plc v Various Claimants, and Cox v Ministry of Justice), there  is more clarity on how and to what extent an employer is liable for an employee's negligence. But what do these basic legal principles look like?

Well, it’s generally accepted that if an employee, acting on the express authorisation of their employer, conducts themselves in a way which is deemed either harmful or morally wrong in the eyes of common law, and through such actions causes hardship and/or loss to a third party, then the employer can be held fully liable for the employee’s actions. On the other hand, if it is unclear whether or not the wrongful, harmful or negligent action was sanctioned by the employer, liability can be more difficult to assign. In some cases, the employer may not be deemed responsible for their employee’s actions. But in other cases, the employer may be deemed vicariously liable.

What is vicarious liability?

Put simply, vicarious liability means that an employer has been judged responsible for a specific act carried out by an employee. In order for an employer to be found vicariously liable, the relationship between the employee’s expressed duties and the harmful/wrongful act in question needed to be analysed. If it can be established that there is a close connection between expressed duties and the act itself, the employer will be deemed vicariously liable.

When does vicarious liability apply?

Typically, vicarious liability applies when the harmful actions of an employee took place in ‘the course of employment’. However, in certain contexts, vicarious liability can also apply if the wrongful act in question was not committed while an employee was conducting their work duties.

With this in mind, there are two main ways in which vicarious liability can apply:

1. Through common law

This typically refers to the clear-cut cases in which it is clearly proved that the wrongful actions of the employee occurred while they carried out their duties, as expressed by their employer.

However, vicarious liability can also be applied in common law when the wrongful act of an employee in question is simply closely connected to the duties they are employed to perform. Therefore, in theory, vicarious liability doesn’t always depend upon an employee being given the specific authority to carry out a wrongful act. If a court decides the employee was authorised to carry out the sort of acts (and not just the specific harmful action) that have given rise to the harm caused, vicarious liability may very well apply.

2. Through the Equality Act 2010

The Equality Act 2010 states that an employer can be liable for the discriminatory acts of one employee towards another. This act also sets out that, in this context, an ‘employee’ is defined as not only those in full-time employment, but also those in short-term and even contractor-based employment. This includes apprentices, workers, agency staff, volunteers and even contractors, such as painters, handymen, electricians, plumbers, etc.

With this in mind, it’s important to note that businesses can be considered liable for harmful acts committed by ‘non-employees’ working within its business. For example, if a third party contractor is working in your premises, or you engage agency staff. However, for this to happen, a court would have to again deem that these ‘non-employees’ were acting on your authority when the harmful/wrongful act occurred.

Guidance for businesses

Whether you run a small business with only a few employees or you’re self-employed and rarely employ contractors, apprentices or volunteers, it’s important to protect yourself against the risks of vicarious liability. There are a number of ways you can do this. This includes:

- Taking out relevant insurance
If your business ever does face a vicarious liability claim, having the cover you need in place can protect you financially. In the event you go to court or are required to pay compensation to a third party, professional indemnity insurance can cover your business against many costs associated with vicarious liability claims. This can include everything from legal defence expenses to pay-outs and settlements. Not all professional indemnity policies include vicarious liability cover as standard, so always read the small print and speak to your insurer if this is something you require.

Although not directly related to vicarious liability, it’s also important to remember that if your business employs any members of staff, you are legally required to purchase employers’ liability insurance.

- Provide ongoing staff training
By providing necessary training to staff members and volunteers, you can reduce the risk of negligently caused injury. From health and safety courses to tools and equipment training, the more qualified and skilled an employee, the less likely they are to be accidentally negligent. Investing in more training can also help employees feel more valued and work more efficiently.

- Clearly outline roles and responsibilities
As we have outlined above, liability cases involving employees can be won and lost on the interpretation of an employee’s duties. To help avoid all doubt, you should ensure all roles and responsibilities are clearly outlined. This includes in initial job descriptions and employment contracts, as well as during induction training. The better an employee’s roles and responsibilities can be defined, the easier it will be to determine liability if an incident occurs.

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