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How far does employer liability reach?

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Perhaps the trickiest area of employment law and one which HR managers and business owners continue to agonise over is that of vicarious liability.

And now, the scope has widened for how far businesses can be responsible for the acts of their employees, secondees and even agency staff.

Thankfully, few employment cases are as grisly as that of JGE v The Portsmouth Roman Catholic Diocesan Trust where the Court of Appeal found that the church could be liable for sexual abuse committed by a priest. However, some employers might still be horrified as it has just extended their responsibility for dubious actions of people on the payroll including those who aren’t strictly speaking employees.

Many modern workforces feature a mixture of employees, agency staff, casual workers and self-employed contractors and for those, the JGE case has important implications.

Vicarious liability traditionally describes circumstances where an organisation is deemed responsible for the wrongful acts of an employee, regardless of whether it was at fault at all. In turn, that means having to pay out compensation for any loss or damage caused by the employee’s wrongful acts.

Previously, to be deemed vicariously liable, two things had to be established: whether there was an employment relationship between the organisation and the wrong-doer, and whether the wrong-doing was committed in the course of their duties. The opposite of that, of course, is where the culprit was simply on a frolic of their own – entirely unrelated to their employment.

In the JGE case, the issue was whether an individual could claim damages from the Catholic Church for having been abused by a priest as a child. Because priests are not employees, it seemed likely that the judgment would have gone in favour of the Church. It didn’t. The court decided that there doesn’t have to be an employment relationship for an organisation to be vicariously liable; simply a relationship which is so close that it can be considered ‘akin’ to an employment relationship.

This leaves businesses potentially liable for a much wider range of staff than simply employees including agency staff, secondees and even people who are simply on work placements. In fact, it seems likely that it is now only independent contractors who fall outside the scope of vicarious liability.

This case has made it painfully clear to businesses that they cannot disregard their responsibilities and potential liabilities for someone’s actions on the basis that the person wouldn’t generally be considered an employee. Even a self-employed consultant could fall within the new remit.

Unfortunately there are no hard and fast rules for when a relationship can be considered akin to an employment relationship. In the JGE case, however, one of the factors which the judge considered was whether the Church had control over the priest and whether he was accountable to the organisation in terms of how he did his job. Likewise, the fact that the priest’s day to day activities were a central part of the organisation’s ‘business’, and that he was integrated into the structure of the church were crucial to the decision. The Court found that he could not have been an independent contractor because he was not in business for himself.

So where does this leave us? On one hand, integrating self-employed individuals into a business can improve communication, service levels and productivity, as well as make it easier to positively influence their conduct and behaviour. The downside is that, from now, doing so will also increase the risk of being held vicariously liable for any wrong-doing. Keeping everyone at an arm’s length on the other hand makes it harder to prevent it. The choice is yours.


 

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