Vicarious Liability in the context of Independent Contractors and Rogue Employees

by Faareen Ali

Vicarious Liability has been an area of great activity recently, as the Supreme Court handed down not one but two judgments defining its’ scope. One case involved Barclays Bank, and the other Morrisons Supermarket.

Both these judgements will offer  comfort to employers, as they demonstrate that employers will not be liable for wrongdoings committed by fire-spitting employees, who are out to harm them, or for independent contractors who are self-employed and operate their own practice.

It had, for long, been the case that employers were not liable for contractors, as they are independent and responsible for their own acts, but the concept evolved in 2012.  Employers could from then be liable for contractors if their relationship was considered close enough to an employment. The Barclays case provides much needed clarity into vicarious liability in the context of independent contractors.

This article is focused on discussing the concept of vicarious liability, how it works, and what these rulings mean for employees and employers.

What is Vicarious Liability?

Vicarious liability can simply be defined as a rule where “liability shifts from the person who committed the wrongful act to another, due to a superior relationship between them”.

In the context of an employer and employee situation, the employer will unfortunately bear the blame and be required to pay out for the wrong committed by employees, if it had occurred in the course of their employment, and whilst delivering their function i.e. authorised task. This is the position now.

Vicarious Liability and Independent Contractors

This case involved Dr. Bates who was contracted by Barclays Bank to undertake unsupervised medical health check-ups of prospective employees, on a fixed fee contract. Following allegations of sexual assault, a claim was brought against Barclays on the grounds that the relationship between them was close enough to an employment, and that they should be vicariously liable, and compensate the aggrieved.

Lower courts had found in favour of the claimants. However, the Supreme Court was quick enough to overturn this, and enforce that where it was  clear that an individual was carrying out an independent business, it was not necessary to consider any factors to examine whether the relationship was close to an employment relationship. In doing so, the court has reinforced the independent contractor defence.

Case Citation: Barclays Bank Plc v Various Claimants [2020] UKSC 2018/0164

Vicarious Liability and Rogue Employees

A senior auditor to Morrisons, Mr Skeleton had developed a grudge against his employer following some disciplinary action. He responded by disclosing personal details of 99,998 co-workers, such as their salaries, bank details and national insurance numbers, to newspapers and data sharing websites, and tried to frame a colleague in due course.

It was reported that it cost the company more than £2 million to remedy the data breach. The victims brought an action against the Supermarket on the grounds that they were directly and vicariously liable for data protection breaches, breach of confidence and/or misuse of private information at common law (judge made law).

The High Court and Court of Appeal had sided with the claimants as they said the data leak was closely connected with his usual auditing role.  However, Supreme Court set the record straight and held that the supermarket would only be vicariously liable if the wrongful act was fairly, and properly connected to his authorised act or function. It also found that employers could also be held vicariously liable under Data Protection breaches.

Case Citation:  Various claimants v WM Morrison Supermarkets plc UKSC 2018/0213

It’s a bitter sweet result for employers all round. They will not be responsible for, or be required to part way with significant sums of money for exclusively independent contractors, who are usually equipped with indemnity insurances, and rogue employees, who exploit their positions to attack them. It really comes down to these two questions in Court:

  • Is the relationship between both parties akin to an employment to justify applying vicarious liability?
  • Is the wrongful act connected to, and fairly and properly regarded as being done in the ordinary course of employment?

With that being said, employers may need to have in place measures to monitor compliance of employees, and arm themselves with sufficient insurances, as they can now be held accountable for data breaches committed by employees, as well as,  non-compliance of direct statutory duties levied upon them.

For more on some of the ground-breaking cases resting in Court of Appeal and/ or Supreme Court which are capable of changing Employment Law, please see here.

Disclaimer: This is a blogging forum tasked with the responsibility of simplifying law, it does not intend for its content to constitute or be used as legal advice.

 

 

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