I am worried that my company is liable for an incident in which an employee punched and racially abused a customer. I know that the company is not at fault and we have a policy of training all employees on equality and diversity, however I am concerned about the possibility of the customer bringing a claim against the company. I would be grateful if you could explain where the law stands on this, and tell me what we can do to reduce the risk of claims.
The term that used to describe the liability of an employer for wrongs committed by an employee is “vicarious liability”. Vicarious liability can arise regardless of whether the employer has committed a wrong. Claimants often rely on this principle to bring claims against the employer rather than the employee, as more often than not, the employer will be better placed financially to pay the penalty.
Circumstances in which a company may be held to be vicariously liable
Vicarious liability in the employment relationship can arise both through common law tortious acts and breaches of statutory obligations.
To establish vicarious liability under common law (which could include, amongst other things, liability for arson, battery, indecent assault, defamation, and theft), a connection between the employment and the wrongful act or omission must be established. This connection must be so close that it would be just and reasonable to impose liability.
There has been much debate as to how close this connection must be to satisfy this test, and the position is still unclear.
In one case, the employer was held not to be vicariously liable where an employee had committed an attack on a customer. It was held that the actions of the employee went beyond the scope of his employment. This however, can be contrasted with a case where the employee was employed specifically for his aggressive behaviour, and was encouraged to perform his duties in an aggressive and intimidatory manner. In this case, the employer was held to be vicariously liable when a customer was stabbed.
In another case, where and employee stole bars of silver from a company to which he was providing services on behalf of his employers, his employer was held to be vicariously liable. It was held that the risk had been reasonably incidental to the purposes for which he had been employed, because the employee had been allowed access to the container from which the silver was stolen, and had been provided with the necessary equipment to break the container’s seal.
The Equality Act 2010 (“EqA”) also provides for vicarious liability for any acts of discrimination, harassment and victimisation, done by an employee in the course of the employee’s employment (which can include not only employment under a contract of employment but also other categories of relationship including apprenticeship and a contract personally to do work), regardless of whether it has been done with the employer’s knowledge or approval.
Reducing the risk of vicarious liability
With regard to vicarious liability under the EqA, it is a defence for the employer to show that it took all reasonable steps to prevent the alleged perpetrator from doing the alleged act of discrimination or from doing anything of that description.
Guidance as to what would constitute “all reasonable steps” has been set out in the Equality and Human Rights Commission’s Code of Practice on Employment. The guidance suggests that employers do the following to limit their chances of vicariously liability:
- implement an equality policy;
- ensure workers are aware of the policy;
- provide equal opportunities training;
- review the equality policy as appropriate; and
- deal effectively with employee complaints.
With regards to vicarious liability under common law, although there is no clear defence, it will assist if the employer can show that it has trained staff and implemented policies and procedures which seek to prevent certain behaviours or actions.