Warning for businesses on vicarious liability
Don’t be caught out when employees behave badly
Scottish employers often take every possible step to manage risks and ensure compliance within their organisations. However, when it comes to taking responsibility for injury claims, there is a risk they cannot fully control due to vicarious liability - an unusual form of liability that typically arises in personal injury cases related to employment. It means an employer can be held responsible for employees’ wrongful actions if those actions cause harm to someone else.
Fortunately for employers, recent legal decisions have narrowed the scope of this liability, ensuring they are not held responsible for actions that fall outside an employee’s regular duties. However, it remains crucial for business leaders to stay vigilant and ensure they meet the necessary standards.
In determining these cases, the underlying policy justification plays a part. The rationale is that because employers benefit from employees' work, they should also be accountable for any harm that work causes to others. Considering whether the outcome of a case is consistent with that policy is particularly important in complex cases.
There have been several complex cases in the Supreme Court, such as the 2023 appeal of Trustees of the Barry Congregation of Jehovah's Witnesses v BXB. This case reaffirmed the two-stage test which must be satisfied for vicarious liability to be applied: firstly, there must be a relationship similar to employment between the employer and person who committed the wrongful act, and secondly, the wrongful act must be closely related to the duties the person was authorised to perform.
The Supreme Court unanimously held the Barry Congregation was not liable for Mark Sewell's actions, despite him committing rape while serving as an elder. Whilst the Court considered the relationship was equivalent to employment, his actions were not closely connected to his work. In considering the wider policy, the Court acknowledged the organisation's significant financial resources, although that did not justify extending the scope of vicarious liability beyond its boundaries.
In another relevant case (C&S v Norman Shaw and Live Active Leisure), the Inner House of the Court of Session refused an appeal by two child victims of sexual abuse perpetrated by an employee of Live Active Leisure. The Court ruled the abuse did not meet the ‘close connection’ test for vicarious liability as it began before Shaw’s employment and the children’s visits to his home weren’t closely related to his caretaker responsibilities.
Earlier this year, the Inner House held that the Lord Advocate, on behalf of the Crown, was not vicariously liable for the actions of Sheriff Brown, accused of sexual harassment by a female solicitor. In dismissing the action, the Court ruled the relationship between sheriff and Crown was not equivalent to employment. Delivering the opinion, Lord Doherty emphasised the Scottish Government has no control over sheriffs’ performance of their judicial functions or the judiciary as an institution. Again, whilst restricting the application of vicarious liability, the court considered the policy implications in checking the justice of the outcome.
The landscape of vicarious liability continues to evolve. While the courts have been careful to limit the scope of this liability, each case brings its own unique facts and challenges - and employers must remain aware of the potential risks and ensure policies and practices are robust enough to mitigate liabilities. By doing so, they can better protect themselves from the risk of the legal and financial consequences vicarious liability may bring.