Vicarious Liability in Tort Law: A Study on Company's Liability for Employee's Actions

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Tort Law

1
A company acts as an employer for its employees due to which it is liable for their actions
which are taken while they are doing their job based on the concept of vicarious liability.1
The doctrine of vicarious liability is used in order to impose strict liability on a person that
did not have the primary liability which means not at fault. Thus, this concept means that a
person is liable for the torts of another person. Vicarious liability is present in the case of the
relationship because a company and its employees because it acts as their employer and it
has rights and liabilities towards third parties based on which it can be held liable by the
court for the tortious acts of its employees.2 However, there are various circumstances
when a company is not liable for the torts committed by its employees. The objective of this
essay is to evaluate the concept of vicarious liability and understand whether a company
should always be held liable for the torts of its employee, especially when they are
committed while at work. This essay will evaluate different cases in which judgments are
given by courts to support or contradict with this argument.
There are various situations in which a party may be held liable by the court with vicarious
liability such as an employer can be held liable for the torts of its employee. In the case of a
company, it is an artificial person that has rights and liabilities as established by the court in
Salomon v Salomon & Co Ltd3; therefore, it has the capability to hire employees, and it is
also liable for their tortious acts rather than the members or directors of the company.
However, a company cannot be held accountable for all the tortious acts of its employees
because there are certain elements which must be present to hold the company liable.
These elements are that the employee must commit a tort when an employer-employee
relationship exists between him/her and the company and the act must come within the
scope of the employment. In this scenario, aggrieved parties who suffer an injury or loss due
to the actions of the employee can hold the employer liable for the damage.4 Although this
concept seems to put a huge onus on the employer; however, it consists of the purpose of
tort law which focuses on compensating the injured party. Since the employer is the one
compensating to the employee, it is usually assumed that he/she is in a better position than
employee which imposes a tortious liability on the employee.
1 Paula Giliker, Vicarious liability in tort: a comparative perspective (Cambridge University Press 2010).
2 NCL Cassells and DR Ball, ‘Difficult airway management and the risk of vicarious liability’ (2014) 69 (10)
Anaesthesia 1178-1179.
3 (1897) AC 22
4 Jenny Steele, Tort Law: Text, cases and materials (Oxford University Press 2010).

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These elements were recognised by the court in the case of Dutton v Bognor Regis Urban
District Council5 in which foundations were laid down by the builder in order to build a
house. These foundations were inadequate to properly support the load of the building due
to which the house was built on rubbish deposit. As per the building laws, it is necessary
that the foundations of the building are approved before their construction is started. The
inspector of the project failed to get the proper instruction before starting the construction
of the building due to which the building company that has employed the inspector was
held liable by the court for the negligence of the inspector.6 Since the inspector was an
employee of the company, the liability of paying the damages to the aggrieved party was
imposed on the corporation because the negligence comes with the scope of the
employment. While defining the employer-employee relationship, the court relies on ‘the
Control Test’ which was established in Yewen v Noakes7 case. As per this case, the court
evaluates who exactly is in the control of the action to impose liable for tortious acts.
Another test is ‘the Organisation/Integration test’ which the court applied in the case of
Stevenson, Jordan & Harrison Ltd v MacDonald & Evans.8 This test assists in distinguishing
between people who sign the ‘contract to provide service’ and ‘contracts of service’. Lastly,
the court also applied the ‘Economic Reality Test’ as seen in Ready Mixed Concrete Ltd v
Minister of Pensions9 which examines the characteristics of work arrangements to
determine the liability.
In Century Insurance v NI Road Transport Board10 case, an employee was hired as a drive for
transferring petrol into an underground storage tank by driving a petrol lorry. During the
job, the driver struck a match in order to light a cigarette which resulted in an explosion and
great damage was caused in the location. The court provided that the driver failed to
maintain his duty of care while discharging his duties during the work due to which the
employer is liable for the damages. In case the company has specifically restricted the
authority of the employee to take specific actions while doing the job, a liable can still be
5 [1972] 1 QB 373
6 Deirdre Ni Fhloinn, ‘Liability in negligence for building defects in Ireland, England and Australia: Where
statute speaks, must common law be silent?’ (2017) 9 (3) International Journal of Law in the Built Environment
178-192.
7 [1880] 6 QBD 530
8 [1952] 1 TLR 101
9 [1968] 2 QB 497
10 [1942] AC 509