The world of work is changing. Shifts in technology, attitudes, equality of bargaining power and economic conditions have bred new types of work and working relationships. Relationships where one party agrees to do work for another have never been binary; but more so now than ever, there are myriad of different types of agreements and relations and the law often struggles to keep pace with events on the ground.
The changing and difficult-to-define nature of working relationships is perhaps illustrated by the constant steam of judgements of the senior courts in recent years on the question of employee/worker status in an employment law context. There are not many areas of law that can boast so many Supreme Court decisions in such a short space of time. However, that is not the only area where the law has been shifting in an attempt to keep up. Employers need to realise that their responsibilities are probably wider than was previously thought, with vicarious liability for the wrongs of others stretching beyond the classic master/servant relationship and stretching into conduct that might not previously have been covered.
The difficult question of employment status
The courts and tribunals have for a long time grappled with the question of employment status. However, the growth of the ‘gig economy’ and the ability of ‘employers’ to find ‘workers’ over whom they can exercise significant control outside of the confines of a normal employer/employee relationship has presented new issues. The sight of three (soon to be four) layers of the judiciary seeking to decipher how the relations generated by use of the Uber app fit within the traditional model which provides for employee, worker or independent contractor status has been interesting to say the least.
Employer’s liability for its employees:
What is the test?
Vicarious liability refers to the duty employers have for acts and omissions of its employees.
.. it is for the court to identify the policy reasons why it is fair, just and reasonable to impose vicarious liability and to lay down the criteria that must be shown to be satisfied in order to establish vicarious liability.
The Courts have identified five policy reasons which ‘usually make it fair, just and reasonable’ to impose vicarious liability in such circumstances:
– The employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;
– The tort will have been committed as a result of activity being taken by the employee on behalf of the employer;
– The employee’s activity is likely to be part of the business activity of the employer;
– The employer, by employing the employee to carry on the activity, will have created the risk of the tort committed by the employee; and
– The employee will, to a greater or lesser degree, have been under the control of the employer.
Stage I: the nature of the relationship – what are the limits?
The law has long since recognised that the employer/employee (master/servant) relationship is one that can give rise to vicarious liability. It is the paradigm example. However, it is clear, particularly now, that is not the only type of relationship that can give rise to vicarious liability.
The Court of Appeal recently held nightclub owners liable for an assault carried out by one of their doormen even though he was not their employee but had been supplied to them by a third-party company. However, the logic of the Court of Appeal’s judgement was that he should be deemed a ‘temporary employee’ of the nightclub, given there had been a transfer of responsibility and control to it. The nightclub owners were not utilising trained specialists on whose skill and expertise they depended, they were ‘well able to employ and train their own door staff’.
In another case, a ‘lucid and bold’ decision according to Lord Philips, the court went further. The Judge found that a diocesan bishop was responsible for the sexual abuse committed by a priest in a children’s home. He acknowledged that the factual relationship between the priest and the bishop may not be categorised as an employment relationship for other purposes. The Court of Appeal upheld the decision, agreeing the relationship was ‘akin to employment’.
Thus, the enquiry is focused on the extent to which the individual is an integral part of the business activities of the defendant. If there is minimal integration and the individual is essentially carrying on activities for an independent third-party business, the defendant will not be vicariously liable.
However, the relationship generally has to contain ‘certain characteristics similar to those found in employment’ or be ‘sufficiently akin to employment’ and it was always the case that a party would not be vicariously liable for a true independent contractor.
Stage 2: the nature of the conduct – what kind of connection is needed?
The ‘during the course of employment’ test is no longer the correct test to apply. The test ought to be changed from a ‘close connection’ test and the question ought to be whether the employee was acting in a representative capacity.
Employer’s liability for the actions of its employees has been on the move and has probably not yet stopped in its tracks. The Supreme Court has set out a clear two-limb test to be applied in every case. The questions to be answered are clear in their form but probably not in their outcome. There are often different views about what is ‘fair, just and reasonable’ in this area and those considerations infect any consideration of the two-stage test. The tentacles of the doctrine appear to be growing and it is not entirely clear where they end. One thing is clear enough: employers ought to carefully check their insurance policies to ensure their potential liabilities for (and not just to) employees, workers and integrated independent contractors are covered.