What is Vicarious Liability?

When it comes to work, being the boss certainly has some advantages. But there are disadvantages as well. For example, there are certain circumstances in which Queensland employers may be legally responsible for their employees’ actions. The technical term for this is vicarious liability. Keep reading to learn more about how this could affect you.

Differentiating between a contractor and an employee

To begin with, it is important to understand the difference between an employee and a contractor. This is a key distinction because vicarious liability does not apply to a principal (someone who retains a contractor for a specific purpose). In other words, you are not legally responsible for a contractor’s actions even though he or she is technically working for you.
That being stated, here are some ways to distinguish contractors from employees.
In general, contractors:
  • Submit quotes for completion of a specific job
  • Have the ability to assign the job to someone else
  • Have their own equipment or tools for the job and do not seek reimbursement for the acquisition or use of said tools or equipment
  • Assume legal responsibility for their own work
  • Operate their own businesses and have the freedom to take on or decline work
  • Pay their own taxes
  • Keep track of their own expenses and earnings
  • Pay for their own holidays or sick leave
  • Organise their own superannuation
Employees:
  • Receive salaries or work on commission
  • Cannot assign tasks to others
  • Get the tools or equipment they need to complete assignments from their employers, or are reimbursed for the acquisition of said equipment or tools
  • Do not assume commercial risk for their work
  • Perform specified work for and as part of their employer’s business
  • Have taxes withheld by their employers, file tax returns based on information provided by the employer, and take applicable tax deductions
  • Get paid sick leave and holidays
  • Can select super funds to which their employers contribute

When vicarious liability applies

Vicarious liability only applies when employees engage in certain conduct or fail to take certain actions “in the course of their employment.” To put it another way, vicarious liability only kicks in when an employee is working or engaged in work-related activities.
Consider the following examples:
  • Employee A constantly makes sexually explicit comments and inappropriate remarks about Employee B’s personal appearance. He makes these comments directly to Employee B and to co-workers in an office setting. Therefore, Employee B may pursue legal action against both Employee A and her employer.
  • Employee B may also pursue legal action against her employer and Employee A if he engages in the same conduct at business functions. These may include office parties, picnics, conferences and so on.
  • Finally, Employee A and the company may face legal action if he uses a work-issued computer or phone to send inappropriate messages to or about Employee B.

Types of cases where vicarious liability applies

As we have noted, vicarious liability applies in workplace discrimination and sexual harassment cases. However, an employer that can prove it provided employee or training in an effort to prevent such activity generally has a viable defence.

Vicarious liability may also apply in personal injury cases where an employee’s negligence is a direct or contributing factor.

For instance, it may kick in if your employee causes a motor vehicle accident whilst driving a company vehicle. Or it may apply if an employee fails to correct or provide sufficient warning about a hazard. However, arguing that the employee was not following instructions is not considered an acceptable defence.

As a general rule, vicarious liability does not preclude an aggrieved party from suing an individual employee who is also responsible for the transgression(s).

Clearly, this is a general overview. Vicarious liability is a complex legal issue with serious implications for Queensland employers. If you have questions or concerns about vicarious liability, contact Australia Lawyers today.