Vicarious Liability

There are a variety of situations in which a party may be charged with vicarious liability. A case in point, parents may be held vicariously liable for the negligent acts of their children. Besides, the employer is liable for the torts of his employee. However, this liability arises only when the employee is acting the course of his or her employment [3] . It is important to note that vicarious liability could be established even when the claimant could not identify which employee breached the duty of care [4] .

Three elements needed to be fulfilled to transfer vicarious liability. They are relationships between employer v employee, tortuous act of negligence committed and within the course of employment. See the case summary of Gregory v Piper.

Employer-employee relationship

The doctrine of respondeat superior is regarding the employer-employee relationship. The doctrine holds employers to be responsible for the lack of care on the part of employees (to whom the employers owe a duty of care). To apply the respondeat superior, the employee’s negligence must occur within the scope of her employment. Additionally, it is important to know whether B is an employee of A and also to determine whether B was within the scope of employment when the negligence act was committed.

The common law allows employers to hire whom they pleased and the employees have the right to choose their employers as well. However, the definition given by the Employment Right Act 1996 (ERA) provides limited assistance to create a clear boundary between workers and employees. In Section 230(1) of the ERA, employees are defined as ‘an individual who has entered or work under (or, where the employment was ceased, worked under) a contract of service’. While in s.230 (2), it advocates that contract of employment ‘is a contract of service or apprenticeship, whether express or implied, and if it is express whether oral or written.’ Thus, the parties themselves could not declare the nature of relationship. Instead, the court is appointed to examine the nature of relationship of the involved parties by looking at the substance over form [5] .

To serve the purpose, several tests are developed to examine the existence of employer-employee relationship, namely control test, the integration test and the multiple tests.

The control test

The first significant test which the courts developed was the control test. According to the test, a person is said to be a servant if his employer retains a right of control not only the work he does, but also the way in which he does it. [6] In sense, the employer is the party that state the work policy of the employee and in charge of the employee when he is carrying out his duties as an employee.

It was first established in the authority of Yewens v Noakes. [7] In this case, the defendant was a hops merchant and possessed certain houses for the purposes of his business. The claimant was the clerk of the defendant with a set annual salary. Meanwhile, he was required to take care of the houses. Thus, he lived in the houses with his with his family. The core issue of the case are regarding the payment of inhabited house duty. Therefore, the key question was whether the claimant a servant of the defendant? It was held that in this instance, the claimant did not fall under the definition of a servant. On appeal, the court held that the premises were purely for trading purposes. Thus, the claimant was only a caretaker. Lord Bramwell stated that a servant is a person who subject to the command of his master as to the manner in which he shall do his work.

This test was furthered in the case of Performing Rights Society v Mitchell and Booker, [8] which stated that, ‘the final test, if there is to be a final test, and certainly the test to be generally applied, lies in the nature and degree of detailed control over the person alleged to be a servant.’

The control test was also applied on the borrowed employees. Given a circumstance that an employer lent his/her employee to another employer, whose employee does the borrowed employee becomes? As shown in the authority of Mersey Docks and harbour Board v Coggins and Griffith (Liverpool) Ltd [9] and Denham v Midland Employers Mutual Assurance Ltd [10] It was held that the employee(Y) will remain as the employee of the general or permanent employer(X) although another employer (Z) borrows his services. This is because, there is a presumption that the control of the employee (Y) still remains on employer (X).

However, the case of Walker v Crystal Palace Football Club [11] reflects the flaw of a control test. Mr. Walker was under a contract of service to the club when he got injured as a result of his negligence at work. Meanwhile, he was subject to the training and method of play both on the pitch and training ground from the coach. If the control test was strictly interpreted, skilled workers would be identified as independent contractors who were unable to rely on the vicarious liability principle against the employer, the football club. Consequently, the courts deemed it fit to develop another test that reflected this development in the workforce. As the courts ruled in favour of Mr. Walker and recognized that skilled and professional people could be employees as well.

The control test is however, appropriate when the employer is superior to the employees in terms of knowledge, skill and experience [12] . 

The Integration test

The organisation test is first identified by Lord Denning in Cassidy v Ministry of Health [13] . Lord Denning applied it while considering whether the doctor working within the NHS is an employee of the Health Authority. It was again reffered by Lord Denning in the case of Stevenson, Jordan & Harrison Ltd v MacDonald and Evans. [14] In this case, Lord Denning further stated that ‘one feature which seems to me to run through the instances is that, under a contract of service, a man is employed as part of the business and his work is done as an integral part of the business; whereas under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it’.

The Multiple Test

The multiple test is also known as economic reality test [15] . It involves the analysis through a checklist of factors regarding the employment status. It amalgamates the control, and organization test; recognises that the though each point is important, no single point to be determinative as employment relationship is far more complex [16] . This test was first established in the case of Ready Mixed Contcrete (South East) Ltd v MPNI [17] .

In reference with the authority, if the appellants were employers, they would be liable to pay the National Insurance contributions of the employees. Lord McKenna commenced by categorising the facts of case into either self-employment or employment. Lord McKenna then examines the facts against three conditions that required building a contract of employment. Firstly, the skills provided must be in exchange with wages. Secondly, control elements should exist on the employer (resembles control test). Thirdly, the contract provision must be in consistent with the control of service. As in this case, Lord McKenna J held, due to the freedom of delegation, the contract between the plaintiff and defendant was contract for service (self-employment).

As consideration is still given to control, the degree of control becomes an important issue. Resembling the facts in Short v J W Henderson Ltd [18] , Lord Thankerton pointed out that there are four indicators to examine the degree of control exercised on an individual: the power to appoint, the power to dismiss, the payment of wages, as relevant to the establishment of existence or the contract of service.

Besides, this multi-factorial test was also applied in the case of Market Investigations v Minister of Social Security by Cookie. He advocated that the core issue is to identify whether the person perform the service in business on his own account. In others words, consideration must also be given to the personal investment in the enterprise. In the far more recent case of Lee Tin Sang v Chung Chi-Keung, [19] the court considered elements such as who owns the tools used, who paid for the materials, and whether the worker stands to make anything from a profit to a loss on completion of the enterprise.

As indicated, the plus point of the multi-factorial test offers the tribunal a great flexibility: all relevant factors will be considered.