The Supreme Court has, for the first time since 2012, considered the law of vicarious liability in the workplace (see box “Establishing liability”). The court has effectively expanded the doctrine of vicarious liability to cover a wider range of factual circumstances, including beyond the employee-employer relationship (Cox v Ministry of Justice and Mohamud v WM Morrison Supermarkets plc [2016] UKSC 10; [2016] UKSC 11).

Establishing liability Where vicarious liability is established, an employer will be liable for the acts of its employees. In an employment context, two things must be established:

  •  A sufficient relationship between the employer and the wrongdoer.
  •  Sufficient connection between that relationship and the wrongdoer’s act.

The consequences for businesses are significant, particularly for organisations with large numbers of employees. The likelihood of legal action and the cost of employer liability insurance are inherently linked to this legal principle.

New realities

Mrs Cox was employed by HM Prison Swansea, supervising both civilian staff and prisoners working in the prison kitchen. She suffered an injury through the negligence of a prisoner, who dropped a sack of rice on her back. She brought a claim against the Ministry of Justice (MoJ). The County Court found that the MoJ was not vicariously liable for the negligence of the prisoner ([2013] EW Misc 1 (CC)). The decision was reversed by the Court of Appeal, which found that the relationship between the prisoner and the prison service was akin to that of employer and employee ([2014] EWCA Civ 132)

The Supreme Court dismissed the subsequent appeal, again holding the MoJ liable. The court stated that vicarious liability can be established in employment-like relationships and not only in the case of employer and employee. The court gave significant weight to two factual elements:

  • Harm was done by a person who carries on activities as an integral part of the business activities of the MoJ and for its benefit.
  • The risk of the wrongful act occurring was created by the MoJ in assigning responsibility for those activities to the wrongdoer.

This decision might be seen as an attempt to recognise the reality of the modern workplace and to reflect the fact that workers often do not have a contract of employment with the organisation for which they work.

Close connection

Mr Mohamud visited a petrol station owned by WM Morrison Supermarkets plc, where he was racially abused, assaulted and told to leave the premises by Mr Khan, an employee of Morrisons. Mr Mohamud sued Morrisons for the actions of Mr Khan. Both the trial judge and the Court of Appeal dismissed the claim, finding that there was an insufficiently close connection between the wrongdoing of Mr Khan and the duties of his employment ([2014] EWCA Civ 116)

Mr Mohamud appealed to the Supreme Court, which allowed the appeal. The close connection test, which formed the basis of the decision in the lower courts, was approved. However, the court found it necessary to distil the essence of this test. In its simplest terms, the test is formed of two questions:

  • What is the nature of the job entrusted to the employee, considered in the broadest terms?
  • Is there a sufficient connection between the position in which the employee is employed and the employee’s wrongful conduct to make it right for the employer to be held liable under the principle of social justice?

The court recognised the imprecision of this test. The court stressed the need for evaluative judgment, having regard to all the circumstances. In this case, Mr Khan’s job was to attend to customers. His response to Mr Mohamud as a potential customer was within the field of activities entrusted to him by his employer. An unbroken sequence of events followed in which Mr Mohamud was told never to return to the premises. While his actions were an abuse of position, Mr Khan was purporting to act about his employer’s business. Morrisons was therefore held responsible for the abuse of the position that it had entrusted to Mr Khan.

What this means for business

The expanded reach of vicarious liability of employers will clearly be of concern to organisations with a large workforce. Prudent employers will consider a range of measures, including staff training and implementing suitable policies. 

An employer can avoid vicarious liability for discrimination committed by employees and detriment on account of whistleblowing if it can show that it took all reasonable steps to prevent the alleged perpetrator from doing the alleged act of discrimination or anything of that description (section 109, Equality Act 2010 and section 19, Enterprise and Regulatory Reform Act 2013). Implementing suitable policies and carrying out proper training can constitute these reasonable steps. 

In an outsourcing context, increased exposure to the risk of vicarious liability will likely see businesses negotiate greater contractual protections with providers, including indemnification against vicarious liability. Risk-averse employers may opt for larger outsourcing providers with greater resources and more comprehensive insurance cover. 

On one level, the decisions of the Supreme Court will be welcomed by businesses. Cox provides clear criteria by which employers can be held vicariously liable for the acts of workers that they do not directly employ. The emphasis on two key elements provides greater clarity than the extended criteria contained within Various Claimants v Catholic Child Welfare Society, which was the last Supreme Court authority on vicarious liability ([2012] UKSC 56)

The impact of Mohamud on businesses is less clear. Employers will be concerned that they will now be liable for violent or reckless acts of their employees committed at work. However, the specific emphasis of the court on the need for evaluative judgment on the given facts of the case should, to an extent, allay this concern. 

In Mohamud, the court differentiated Warren v Henlys Ltd, which also involved an assault committed by a petrol pump attendant ([1948] 2 All ER 935). Due to a broken sequence of events leading to the assault, the employer in Warren was not held vicariously liable. The customer left the petrol station, subsequently returning to the premises to make a personal complaint, at which point he was assaulted. Warren should act as a reassuring reminder to larger employers that limitations on this doctrine remain, as well as a reminder to all that petrol stations can be hazardous environments. 

This article first appeared in the April 2016 issue of PLC Magazine.  

PLC Magazine homepage: http://uk.practicallaw.com/resources/uk-publications/plc-magazine  Original article: http://uk.practicallaw.com/2-625-0789