As an employer, you may well find yourself facing a claim from a member of the public, or another employee, who has been injured by your employee – perhaps negligently, or even from an intentional assault.
The injured person can claim against you, rather than the individual who caused the harm, if there is a sufficiently close connection between the employment and the conduct that caused the injury – known as ‘vicarious liability’.
This can arise even in very extreme circumstances, as demonstrated by one recent case.
Mohamud v Morrisons
Mr Mohamud stopped at a petrol station owned by Morrisons and was served by Mr Khan, a Morrisons’ employee. Mr Khan subjected Mr Mohamud to verbal abuse in the petrol station, then physically assaulted him at his car. Mr Khan ignored the instructions of his supervisor, who tried to stop him pursuing Mr Mohamud.
The Supreme Court found Morrisons liable for Mr Khan’s conduct: whilst clearly a gross abuse of his position, the violence was connected to his role of serving customers.
Prevention and insurance
There are of course steps that can guard against inappropriate conduct by employees, such as robust recruitment, training and performance management, and the clear delineation of expected standards of conduct, and enforcement of these via disciplinary action where appropriate.
However, as the court stated in Morrisons: “the risk of an employee misusing his position is one of life’s unavoidable facts“, and there are some extremes of conduct that simply cannot be foreseen or avoided.
So, in addition to taking preventative measures, most businesses will insure themselves against this risk.
Employers are legally required to have employer’s liability insurance (to cover injuries sustained by employees in the course of their employment). Most will also have a public liability policy, to protect against claims for injuries sustained by those outside the business, including members of the public and customers (like Mr Mohamud in Morrisons).
Morrisons should encourage those without public liability insurance to consider whether the potential benefits outweigh any additional premiums. If you don’t have this, you could find yourself liable for a claim, which could be costly in both damages and legal costs.
What about the employee – do they get away with it?
Although your employee would no doubt face a performance or disciplinary investigation, you might also be considering whether you can recoup from them any losses you have suffered, perhaps because you don’t have insurance, or from increased insurance premiums.
Although rare in practice, as the law currently stands in Scotland, if a vicarious liability claim against you is successful, you can try to recover your losses from the employee on the basis that they have breached the implied term in their contract that they will exercise reasonable care in performing their duties (unless your contracts exclude this right, which is extremely unlikely).
In Bell v Alliance Medical (which we’ve written about previously) a radiographer, Mrs McColl, injured a patient during tests. Her employer was vicariously liable, but could seek an indemnity from Mrs McColl, meaning ultimate responsibility for the £700,000 damages rested with her. Luckily for Mrs McColl, she was insured via the Society of Radiographers.
However, if a case was appealed right up to the Supreme Court, it could reverse or narrow this position. So, is there anything else you can do?
What about an express indemnity in the employment contract?
It is far from common, but there is nothing in principle to prevent employment contracts from including an express term stating that employees are responsible for losses you incur in vicarious liability situations. This would avoid the Supreme Court risk highlighted above.
Practically, of course, this may not be accepted by all employees, particularly senior employees with significant bargaining power, and those in unionised environments. Further down the line, enforcement may also be pointless on account of the employee’s financial resources unless, like Mrs McColl, they have insurance.
But, it will be interesting to see if the increased focus on vicarious liability following Morrisons leads some employers to consider introducing express employee indemnities.
Should we encourage employees to insure themselves?
The court in Bell said that, in light of its decision (that employers could seek indemnity from employees), “a prudent employee…would now seek insurance“. In some industries, individual employees may already have their own insurance, through a professional body or defence organisation (as was the case in Bell).
It is unlikely you’d have any control over an employee’s policy terms, so couldn’t always rely on this to cover your losses in a vicarious liability situation; but, depending on your work environment and level of risk, encouraging employees to insure themselves may be something to think about.
What about independent contractors, and other workers?
In some circumstances, you may find yourself vicariously liable for the actions of independent contractors and others working for you (even though they are not your employees). It may be worth reviewing relevant contracts, and ensuring these include appropriate safeguards.
A final word on discrimination
Bear in mind that, under the Equality Act, you will also be liable for discrimination or harassment as between your employees if it occurs ‘in the course of employment’. However, unlike in the case of physical assaults or other injuries, you will have a defence if you can show that you took all reasonable steps to prevent this – we outlined some key steps in our previous blog.