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Employers' Liability

 

While actions against employers account for around only 15% of tort cases, they are more likely to succeed. This is in part because of the extensive rubric of employer duties which exist in the modern work environment and the manner in which these are applied.

The Sources for employer liability are:

•  Non-delegable duties

•  Statutory duties

•  Vicarious liability

It used to be the case that the liability of an employer for work related accidents was extremely difficult to establish. The liability, essentially, had to be personal which is very unlikely when the employer does not take a personal hand in the work being done. And, in any case, the volenti and contributory negligence (which was a complete defence) defences often applied.

 

i) Non-Delegable Duties

 

Since ­Wilsons and Clyde Coal v English an employer can be liable when an agent negligently performs a task which forms part of the employer's non-delegable duties. The court stated that there are "fundamental obligations of a contract of employment ... for which employers are absolutely responsible." It goes on to describe the employer's duties as threefold:

•  The provision of a competent staff,

•  Adequate materials,

•  And a proper system of effective supervision.

If a duty falls within the spirit or letter of the above it may be non-delagable. If so, there are two further points to consider.

Firstly, that it must be established that causation exists between the failure and the injury. For example, a company's training was insufficient because it failed to deal with how to load a truck - but the training was perfectly adequate as to stopping distances - then the Claimant cannot claim the poor training contributed to their failure to leave an adequate gap.

Secondly, it is possible for the Claimant to contribute negligently to their injury. In cases where the Claimant may have been negligent, a judge can reduce an award by what he thinks "just and equitable having regard to the claimant's share in the responsibility for the damage." For example, driving, unlike something such as an unsafe workplace, is something the employee has control over. In order to be in possession of a driver's license, the Claimant will have sat an exam on road safety. They should therefore have an understanding themselves, regardless of training, of safe stopping distances. If the company can prove that the Claimant "ought reasonably to have foreseen that, if he did not act as a reasonable, prudent man, he might be hurt", it may be possible for an award to be reduced. It is noteworthy that employer's non-delegable duties apply also to independent contractors; the importance of the employee and independant contractor distinction is elaborated on below.

 

ii) Statutory Responsibilities

 

There is a large framework of statutory duties. Significant amongst these are ss1 and 2 of the Health and Safety at Work Act 1974 - which applies to anyone 'at work'. These provide that,

"(1) It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees.

(2)Without prejudice to the generality of an employer's duty under the preceding subsection, the matters to which that duty extends include in particular-

(a)the provision and maintenance of plant and systems of work that are, so far as is reasonably practicable, safe and without risks to health;

(b)arrangements for ensuring, so far as is reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances;

(c)the provision of such information, instruction, training and supervision as is necessary to ensure, so far as is reasonably practicable, the health and safety at work of his employees;

(d)so far as is reasonably practicable as regards any place of work under the employer's control, the maintenance of it in a condition that is safe and without risks to health and the provision and maintenance of means of access to and egress from it that are safe and without such risks;

(e)the provision and maintenance of a working environment for his employees that is, so far as is reasonably practicable, safe, without risks to health, and adequate as regards facilities and arrangements for their welfare at work."

The use of "so far as reasonably possible" permits an employer to weigh the risk against the cost and labour in averting it. Where the expenditure outweighs the risk, and it is reasonable, they need not follow the provision. However, the Act is not of much use to a Claimant as it imposes criminal sanctions such as fines and imprisonment of upper management.

 

iii) Vicarious Liability

An employer may be held vicariously liable for the tort of an employee. This liability will depend on whether there was an employer-employee relationship and whether the tort was committed in the course of employment.

Points to note:

•  Vicarious liability does not require any wrong doing by the employer,

•  The cases are muddled and not always principled,

•  Loss distribution features as a strong underlying factor - who has deeper pockets,

•  There is no contributory negligence,

•  The courts tend to look at the job generally, rather than the specific acts constituting the tort.

 

Employee-Employer Relationship

The employee-employer relationship is paramount to the imposition of vicarious liability. The classification of an individual as an employee as opposed to an independent contractor depends on a number of factors (the distinction can also be phrased as a contract for service or a contract for services). The courts do not exclusively rely on criteria which may establish an individual as an employee for tax or social security but rather have their own guidelines.

The idea originated with the concept of control, which Kahn-Freud has criticised for being archaic. He says,

"The technical and economic developments of all industrial societies have nullified these assumptions [of control] ... To say of the captain of a ship, the pilot of an aeroplane, the driver of a railway engine, of a motor vehicle, of a crane, that the employer 'controls' the performance of the work is unrealistic and almost grotesque".

In Market Investigations v Minister of Social Security , Cooke J stated that factors such as control over the employee, ownership of the tools, chance of profit and risk of loss were paramount in deciding the question. Kidner has suggested that an assessment of how far the activity is core to the company is a significant concept underpinning the test. So ask the question, how important are the activities the individual is performing?

In Hall (Inspector of Taxes) v Lorimer [1994] 1 ALL ER 250 the issue was what tax schedule was most appropriate for a certain taxpayer (it was not a vicarious liability case). The individual worked freelance in television for a large number of companies usually only for a day. He didn't hire any employees but arranged for people to replace him if he was unable to work. He worked at the studios of a company who also supplied all the equipment. He wasn't exposed to any profit/loss from the television programmes he helped make but he could lose money if a client of the company refused to pay e.g. insolvency. He was judged not to be an employee because of the exposure to non-payment and the fact that he frequently changed the company he worked for. So the concepts of risk and permanency at the company were decisive.

The parties' label on the relationship can also be important as it can indicate the intention between the parties. However, this factor needs to be carefully weighed in the mix. It's not in the public interest to allow employers to avoid vicarious liability simply by having the employee sign a contract which labels them as an independent contractor. The fact that employers often have greater bargaining power makes this a more real possibility. However, there is no reason to disallow a certain relationship from being formed if both parties understand the consequences of it i.e. the contractor wants to have a larger more employee-like role in the company without wanting the employer to assume liability.

How about the situation where an employee is hired out? In Mersey Docks v Coggins & Griffiths the House of Lords had to decide whether the permanent employer or the temporary hirer was vicariously liable. In that case a crane operator, paid and governed by the Harbour Board, was hired out to dock workers who directed what he needed to do but had no power to tell him how to do it. The crane operator caused an injury. The House used a control test in holding that the permanent employer remained liable as the hirer had no power to control the manner or method of crane operation. It is important to note that liability of the employee can be apportioned between the employers using a contract. However, the drafter must be careful it doesn't fall foul of UCTA 1977 by seeking to exclude liability where it would be unreasonable: section 2(2). Compare with non-delegable duties which cannot be excluded.

 

In the Course of Employment

Not an area free from doubt, but the better view is that the tort must be committed in the course of employment. This is not a straight forward requirement as employees are obviously not meant to behave unlawfully in the course of employment so committing a tort is clearly outside of the course of employment in one sense. Originally the question was whether the employee had performed an authorised act in an unlawful and unauthorised way.

In Kay v ITW [1968] 1 QB 140, an employer was held liable when their employee moved a truck (injuring the Claimant) which was blocking the entrance to a shed though the truck did not belong to the employer and he had no right to do so. The Court of Appeal held this was within the 'scope of authority' as he was trying to return a forklift truck. He was trying to perform a work duty which he was authorised to do but went about it in a negligent way.

How about situations where the actions were not implicitly contemplated by the employer. In the Privy Council case Engineering Services v Kingston the court held that the employer of a fire brigade was not liable when that fire brigade reached the fire five times slower than usual because they were on a 'go-slow'. The employees were clearly performing actions which they ordinarily performed i.e. putting out a fire. However, the go-slow was the opposite of the employer's interests and could not be said to be in the course of employment.

Two strands of reasoning emerge:

•  Were they trying to perform their work duties but negligently ( Kay ),

•  Were the actions in the employer's (overarching) interests ( Engineering Services ),

A case which illustrates these points is Hemphill v Williams [1966] 2 Lloyd's Rep 101. A driver was driving scouts back from camp. He had been expressly told what route to take and which not to take. At the request of some of the passengers he deviated and took one of the routes he ought not and there was an accident. The employer was held liable even though the employee disobeyed an obvious command as the driver was not on a 'frolic of his own'. The House of Lords said,

"When there are passengers whom the servant on his master's behalf takes on board for transport to Glasgow, their transport and safety does not cease at a certain stage of the journey..."

Breaking the judgment down, the reason why it did not cease was because the employer had undertaken to provide transport the entire distance. Had the vehicle been empty and the driver gone on a frolic of their own, the employer would not have been liable. Thus point 1 above is satisfied. The next question is whether it was in the employer's interests. It would seem that directly disobeying could never be in the employer's interests, just like industrial action cannot be. However, it is difficult to understand then why this case was upheld. It is submitted that the operative distinction is the employer's interests and the employer's overarching interests. In Engineering Services the go-slow was not in the employer's overarching interest. Whereas in Hemphill getting the passengers to their destination was in the overarching interests, however the specific interest of what route to take was not.

With regard to prohibitions by employers, it was said that:

"there are prohibitions which limit the sphere of employment, and prohibitions which only deal with conduct within the sphere of employment."

In Rose v Plenty an employer was liable for injuries to a young boy who had been riding with the milkman employee. The employer had expressly said that children could not help the milkmen delivering milk. However, the Court of Appeal said that "if it is done for his employer's business, it is usually done in the course of his employment." The employee allowed the boy to do part of his employer's work. Thus while the actions were against the prohibition by the employer they still fell within the employer's overarching interest of having milk delivered.

However, how can this case be reconciled with Twine v Bean's Express where a employee had a similar prohibition about allowing people into the company vehicle? It was held that although driving the vehicle was clearly within the course of employment, giving a lift to another person was outside of it. The Court in Rose v Plenty sought to distinguish Twine's Case by saying that the prohibitions were different. In Twine it defined the employment whereas in Rose it merely defined how the employment should be conducted. The operative distinction is very hard to appreciate clearly. In Rose the duties of the milkman were to deliver milk and collect empty bottles, thus the prohibition was merely a stipulation of how those main duties should be performed i.e. alone without anyone on the milk float. Whereas in Twine the employee sole job was to drive the van from Post Office to Post Office. Thus the operation and use of the vehicle was more central to the duties than it was in Rose. Then again, however, they were both delivery men. Is the distinction as clear as it is made out by the majority in Rose? (see the dissenting judgment of Lawton LJ)

The line can be extremely hard to draw and cases. As Scarman LJ said in Rose v Plenty , "I think it is important to realise that the principle of vicarious liability is one of public policy. It is not a principle which derives from a critical or refined consideration of other concepts in the common law..."

 

Criminal/Intentional Acts by Employees

The reasoning is slightly different when we speak about intentional acts. In Lister v Hesley Hall the Claimants had been abused by a warden at school. They sought compensation from the warden's employer. The test used by the House of Lords was whether there is a very close connection between the torts and the employment. The House held that it was fair and just to find that this connection did exist. The rationale was that the sexual abuse was inextricably woven into the fabric of his duties as warden since he was responsible for their care and welfare. His duty was to spend time with the children and have a close relationship; he did this but in a peverse way. The employee had the opportunity by virtue of his job and he abused a special position of care. There was thus a close connection. However, what happened to the idea of an action being completely outside the sphere of employment? This liberalisation of the test seems to be due to loss distribution rather than principle.

 

 

Criticism

Vicarious liability cases have often been criticised for failing to justify a strong enough link between the tort of the employee and the responsibility of the employer. An example would be where an employee carelessly threw a match on the ground causing a fire. The act of carelessness was in no way within the employee's duties and, indeed, quite against the safety he ought usually to have exercised as a petrol delivery driver. It was not in the employer's specific or overarching interests. Nonetheless, however, the employer was found liable. Glanville Williams has said in his analysis of the theory behind vicarious liability,

"What other theory is there? Well, there is the purely cynical theory that the master is liable because he has a purse worth opening. The master is frequently rich, and he is usually insured..."

Atiyah has advanced a slightly different justification, viz., loss-distribution. For Atiyah, an employer rarely meets the loss out of their own pocket (though a sole trader would have to) but rather it is met from the company's assets. In turn, the company will gradually pass this loss on to consumers by way of increased prices. These consumers may be able to pass the cost on themselves if they are not individuals but businesses. Note that both of these prominent theorists seek to find the justification for vicarious liability in a discourse which is different from the usual discourse of tort law, namely, the discourse of fault.

However, while distribution of loss may provide the rational, it cannot be sufficient in itself: the doctrine must also be fair. In an oft quoted Canadian case, it was said:

"Vicarious liability is arguably fair in this sense. The employer puts in the community an enterprise which carries with it certain risks. When those risks materialise and cause injury to a member of the public despite the employer's reasonable efforts, it is fair that the person or organisation that creates the enterprise and hence the risk should bear the loss ."

In that case a non-profit organisation was not held liable when one of its employees abused a child in its care. The ratio was that,

"Where vicarious liability is not closely and materially related to a risk introduced or enhanced by the employer, it serves no deterrent purpose, and relegates the employer to the status of an involuntary insurer."

However, how does this reasoning sit with Century Insurance ? The employer in both cases hired the employee and put them in the situation where the tort occurred, thus causation in the broad sense exists. How about fairness, was it any more fair that the driver the employer in Century Insurance be liable, arguably not given the gravity of the tort in Bazley.

How about deterrence, identified in the last quote as a factor for consideration. The idea behind deterrence is assumedly that the employer will exercise greater control over the employee such as more training, supervision and better organisation. This idea seems pointless, however, since the basis of vicarious liability is not negligence by the employer. For example, if the employee was poorly trained then there are rules which already exist to punish them, non-delegable duties and statutory rules. If, however, the employee was very well trained then what does the imposition of liability do: how can you deter someone who is already doing everything practicable to avoid problems. You can only deter someone from dropping below the standard, deterrence has no effect on someone who has achieved the standard. Not to mention the risk of over-deterrence identified by Binnie J in the Canadian case Jacobi v Griffiths .

 

Conclusion

The doctrine of vicarious liability seems to be more a compensation system than principled legal doctrine. The law is messy and cases on the fringe sometimes appear as if they could go either way. The 'close connection test' created in 2002 will be helpful to appropriate Claimants but when it is or isn't to be applied is a matter of confusion. In sum, the law would be better served by adopting a test such as that suggested by Townshend-Smith, namely, a presumption that the employee was acting in the course of employment as it created the opportunity but with a defence available to employers that they took reasonable steps to prevent the tort. Placing the law on a statutory footing would be the best idea.

 

The Pearson Commission, vol II table 11.

Priestly v Fowler (1887) 3 M&W 1.

[1938] AC 57.

Ibid . At 78.

Uddin v . Associated Portland Cement Manufacturers [1965] 2 Q.B. 582

Law Reform (Contributory Negligence) Act 1945, section 1(1).

Jones v Livox Quarries , (1952) 2 QB 608, per Lord Denning.

­Wilsons and Clyde Coal [1938] AC 57 at p81.

For information on haulage and the Act by the Health and Safety Executive, see http://www.hse.gov.uk/pubns/indg379.pdf.

Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Corporation [2000] 1 AC

Though, arguably, it is difficult to understand why they should not rely on existing criteria in broader areas of law. Though, undoubtedly, broader cases will serve to inform the decisions made by judges to some degree.

Servants and Independent Contractors (1951) 14 MLR 504.

[1969] 2 QB 173.

Kidner, Vicarious Liability: for whom should the employer be liable? (1995) 15 LS 47.

Ferguson v John Dawson & Partners [1976] 1 WLR 1213.

[1947] AC 1.

[1989] 1 WLR 69.

Plumb v Cobden Flour Mills [1914] AC 62 at 67.

[1976] 1 WLR 141.

(1946) 175 LT 131.

[2002] 1 AC 215.

Century Insurance Company Limited v Northern Ireland Transport Board [1942] AC 509.

Vicarious Liability and the Master's Indemnity (1957) 20 MLR 220.

Atiyah, Vicarious Liability (1967; London Butterworths).

Though see Denning's judgment in Nettleship v Weston , where a learner driver was liable for an accident because they were insured. By and large though, tort law is not primarily concerned with loss distribution but rather blame.

Bazley v Curry (1999) 174 DLR (4 th ) 45 (Supreme Court of Canada). That the principles espoused in this case are applicable in English law was confirmed by the House of Lords, Lister v Hesley Hall [2002] 1 AC 215.

(1999) 174 DLR (4 th ) 71.

(2000) 8 Tort L Rev 108.