Vicarious Liability

i) With reference to relevant cases, critically examine the tests used by the courts to determine whether or not a person is an employee. ii) In relation to employees only, (not independent contractors), explain the concept and operation of vicarious liability

Employed persons are, then, divided into two essential groups. The first group is 'those employed to perform services in connection with the affairs of the employer and over whom the employer has control in the performance of those services'. the alternative group consists of those 'who do work for another, but who are not controlled by that other in the performance of that work'.

To begin with the statutory definition of an 'employee', the ERA 1996 defines an employee as an individual who has entered or who works under a contract of employment (ERA 1996 s230 (1)). The same Act defines a contract of employment as a contract of service or apprenticeship, whether express or implied, and if it is express, whether it is oral or in writing (ERA 1996 s230 (2)). These definitions provide a useful starting point in assessing whether an individual is an employee or an independent contractor, but they are neither conclusive nor particularly enlightening. It has, therefore, been left to the courts to develop tests to assess the capacity in which person works for another. These, in some instances, go back way beyond the statutory provisions of 1996.

The first significant test which the courts developed was the so-called 'control test'. This was first espoused in the nineteenth century case of Yewens v Noakes. In this case, the Respondent was a hops merchant and possessed certain houses, which had an internal communication throughout, and which were used for the purposes of his business. Keppel looked after the houses, and lived in them for this purpose, but he was also a clerk in the Respondent's pay at a set annual salary. He lived in the houses with his wife, a child, and a servant. The case concerned the payment of inhabited house duty, and a key question was whether Keppel was the servant of the Respondent. It was held that in this instance, Keppel was not (and, therefore, the Respondent was liable to pay the duty). On appeal, however, it was held that the premises were held purely for trade purposes, and as Keppel's position was simply that of a caretaker, the exemption claimed was allowed. A servant, it was stated, is a person subject to the command of his master as to the manner in which he shall do his work (Bramwell, LJ). The question of whether a person is an employee, then, according to this test, depends upon the degree of control which the 'employer' exercises over the worker. This test was furthered in the case of Performing Right Society Ltd v Mitchell and Booker Ltd. In this, McCardie J stated that "the final test... lies in the nature and degree of detailed control over the person alleged to be a servant."

This would, at first sight, appear to be a sensible and fairly straightforward test that would be able to identify quite easily who was an employee. There are, however, difficulties which arise from this test. A common objection to this test revolves around the situation of an agency worker. An agency worker is hired out to a person other than their strict employer (the agency itself), and the agency worker then becomes subject to the requirements of the hirer (as opposed to their employer). In the case of Honeywill and Stein Ltd v Larkin Bros Ltd, a person is an employee where the employer 'retains control of the actual performance of the work'. In the case of the agency worker, though, the agency itself retains very little control over the performance of the worker's work.

The difficulties which arise from this sort of situation have led some judges to apply a slightly different test, known as the integration / organisation test. This was initially expounded in the case of Stevenson, Jordan & Harrison Ltd v MacDonald and Evans (1952). In this case, Lord Denning 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.' This test has also been criticised, however, on the grounds that contracting out, especially in the modern business world, can be integral to business, so the test becomes paradoxical.

In the far more recent case of Lee Tin Sang v Chung Chi-Keung, a different approach was utilised. The relevant question was 'is the worker in business on his own account?' In order to answer this question, the court will consider such things 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. An example of an employee according to this test would be a building worker who is paid, but neither hires his own help nor provides his own equipment and has no say in the control of the site. This test, then, is based upon personal investment in the enterprise.

With all these tests, there remain certain categories of worker who are still problematic. Hospital staff, for example, have caused considerable trouble. It is now generally held that nurses, radiographers, house surgeons and assistant medical officers in full time service of hospitals are employees, as will surgeons and consultants. Borrowed employees also create a problem, as was identified in the case of Mersey Docks and harbour Board v Coggins and Griffith (Liverpool) Ltd. When a person is lent by his employer to another, whose employee does he become? It was held that someone remains the employee of the general or permanent employer although another employer borrows his services.

ii) One of the main reasons why the distinction between employees and independent contractors is so important is as follows. If an employee commits a tort in the course of his employment, then the employer is liable whether or not he himself has committed the tort. In the case of Bartonshill Coal Co v McGuire, it was stated that 'every act which is done by a servant in the course of his duty is regarded as done by his master's orders, and consequently is the same as if it were the master's own act.' As Murphy states, this is the 'clearest case of strict tortuous liability, and it may be regarded as a judicial decision of policy that the employer can be made to bear the financial responsibility for those torts committed by his employees in the furtherance of his enterprise.' An employer can, then, be vicariously liable for the torts committed by his employees, but not independent contractors.

Vicarious liability can be established where a duty of care imposed on an employer has been broken, but the claimant cannot identify which employee breached it. An employer, then, will not escape liability where a particular employee of his cannot be identified to have been responsible for the breach. This was established in Grant v Australian Knitting Mills Ltd. In the case of Roe v Minister of Health, it was stated that where the claimant established negligence on the part of one or more of several employee of the defendant hospital, the defendant authority was vicariously liable despite the fact that the claimant could not prove which of the employees had been negligent.

In establishing vicarious liability, the crucial question is whether the act was done by the employee 'in the course of his employment'. The courts have devised certain principles which assist in determining this. What constitutes, in legal terms, a 'course of employment'? It used to be considered that the distinction lay between an employee's wrongful mode of doing authorised work, and his performance of some unauthorised act. The employer is liable only for the former; not the latter (Goh Choon Seng v Lee Kim Soo). An example of this approach was in Century Insurance Co Ltd v Northern Ireland Road Transport Board, in which a petrol lorry driver tried to light a cigarette with a lit match while in a petrol station. After throwing the lit match onto the floor, there was an explosion and a fire. The employers were held liable, as the driver did the act in the course of carrying out his job of delivering the petrol. It was, however, an unauthorised way of doing what he was employed to do, but the employers were still vicariously liable for the damage caused. Another case in which this was applied was Harrison v Michelin Tyre Co Ltd, in which an employee of the defendant injured the claimant by deliberately steering his truck off the road. Despite this deliberate 'horseplay' it was held that this did not take the servant outside the course of his employment.

Another important consideration with regard to vicarious liability is the time when the act was committed by the employee. It is normally only within the scope of his employment if the act is committed during the authorised period of work. A period 'not unreasonably disconnected from the authorised period of work' will also be treated as being within the scope of his employment. In Ruddiman & Co v Smith, for example, a clerk, before going home but after the hours of his employment, accidentally left a tap running which flooded the premises. The clerk's employers were held liable for the damage to adjoining premises as the act was considered to be within the scope of his employment.

There is a further important consideration with regard to employees travelling to and from work. This would not usually be considered to be within the scope of their employment, unless the travel is so closely connected with the person's work that this principle cannot apply. In Smith v Stages, for example, an employee was involved in a road accident travelling back to his normal place of employment after having been working elsewhere. This was held to be within the course of his employment, as the worker was paid as a normal working day for his day of travel. What about where an employee takes a detour? In Joel v Morrison, the rule was established with regard to this scenario: 'If he was going out of his way, against his master's implied commands when driving on his master's business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master's business, the master will not be liable.'

An employer may, on occasion, expressly forbid certain acts. Despite this, however, it is sometimes the case that an act done which has been prohibited is not outside the scope of employment. The policy reason for this is to avoid employers being able to escape liability simply by issuing specific orders not to be negligent. The rule in this area was established in Plumb v Cobden Flour Mills Co Ltd. In this case, Lord Dunedin distinguished between prohibitions which 'limit the sphere of employment', and those which 'only deal with conduct within the sphere of employment'. He then stated that only a transgression of the former class carries an employee outside the scope of his employment. An example of this being applied was in the case of LCC v Cattermoles (Garages) Ltd. A garage worker was employed to move vehicles in a garage, but was prohibited from driving them. When he drove a van out of the garage onto the highway, and collided with another vehicle, it was held to be acting within the course of his employment by making room for other vans inside the garage.

In assessing whether an employer is vicariously liable for the negligent acts of his employees, several factors must be considered. Firstly, is the worker an employee or an independent contractor (the distinction which was discussed in part i)). Then one must consider whether the employee was operating within the course of his employment. In answering this, the nature of his act, as well as the timing must be considered. Vicarious liability exists to ensure that employers shoulder the financial burden of negligence claims which they are better equipped to handle than individual workers.

Bibliography

Statutes

  • Employment Rights Act 1996

Cases

  • Bartonshill Coal Co v McGuire (1858) 3 Macq 300
  • Century Insurance Co Ltd v Northern Ireland Road Transport Board [1942] AC 509, HL
  • Goh Choon Seng v Lee Kim Soo [1925] AC 550
  • Grant v Australian Knitting Mills Ltd [1936] AC 85
  • Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191Joel v Morrison (1834) 6 C & P 501
  • Lee Tin Sang v Chung Chi-Keung [1990] 2 AC 374, HL
  • Mersey Docks and harbour Board v Coggins and Griffith (Liverpool) Ltd [1947] AC 1, HL
  • Performing Right Society Ltd v Mitchell and Booker Ltd [1924] 1 KB 762
  • Plumb v Cobden Flour Mills Co Ltd [1914] AC 62
  • Roe v Minister of Health [1954] 2 QB 66, CA
  • Ruddiman & Co v Smith (1889) 60 LT 708
  • Smith v Stages [1989] AC 928, HL
  • Stevenson, Jordan & Harrison Ltd v MacDonald and Evans [1952] 1 TLR 101
  • Yewens v Noakes (1881) LR 6 QBD 530, CA

Secondary sources

  • Murphy, J., Street on Torts (LexisNexis, 2003)


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