As an employer, you might wonder whether you are vicariously liable for your employee’s conduct. The short answer is yes. There are many areas of the law where vicarious liability can come into play. However, this article will only look at vicarious liability in an employment relationship. However, to ensure you better understand your potential liability in the employment relationship, this article will explain the following:
- vicarious liability;
- the consequences of being vicariously liable; and
- what you can do to reduce your risk of vicarious liability.
What is Vicarious Liability?
Vicarious liability means that one party can be held liable for the acts or omissions of another party. For example, an employer can be held liable for their employee’s act or omission in employment relationship.
In other words, if your employee does something wrong, it is as though you have committed that wrong. Additionally, a court can find you liable even if you were unaware of the wrongdoing. Additionally, the fact an employee’s act is a criminal offence does not absolve you of vicarious liability.
What Does This Mean For Me as an Employer?
Generally, employees are responsible for their own actions. However, an employer must prove that they took all “reasonable steps” to prevent such behaviour in the workplace.
Additionally, you must also take all reasonable steps to resolve an incident as soon as you are aware of it. Sometimes, things will happen in your workplace that are out of your control. But it is how you deal with these incidents that is important.
As an employer, condoning inappropriate behaviour (such as harassment or discrimination) can be just as unacceptable as initiating it. For example, in a case against Qantas, they were found to be vicariously liable for racial discrimination in the workplace. In this situation, an employee made racial remarks in front of their supervisor. As a result, the court found the supervisor accepted the behaviour.
Continue reading this article below the formHow Can I Reduce My Risk of Vicarious Liability?
These are some of the ways that you can reduce your vicarious liability as an employer. You should:
- adopt workplace policies, especially an Anti-Discrimination, Harassment and Bullying (ADHB) Policy, Information Technology Policy and Work Health & Safety Policy;
- ensure that your employees understand your policies, agree to comply with the policies and have copies of the policies available to them at all times;
- provide regular training for employees and managers/supervisors concerning these policies;
- regularly review and update these policies; and
- have set internal processes for monitoring the workplace environment and culture to ensure that everything is running smoothly and there are no issues.
It is also essential to take any complaints seriously. It may be helpful to have a grievance policy in your business so that employees know the process and feel comfortable talking to someone about it. This will also mitigate your risk in terms of vicarious liability as you can demonstrate that you took reasonable steps to prevent and resolve any issues.
What Are the Consequences of Being Liable?
Employers can learn much about vicarious liability from the landmark case concerning Oracle. Ms Richardson claimed her ex-employer for the sexual harassment that she was subject to by one of her senior colleagues, Mr Tucker.
The Court found that Oracle failed to prove that it took reasonable steps to prevent Mr Tucker from sexually harassing Ms Richardson. As such, Oracle was held vicariously liable for their employee’s actions. While Oracle had a policy in place and conducted an investigation after the accusations, their workplace policy did not clearly state that:
- sexual harassment is against the law; and
- the employer and employee would be liable for the conduct.
As such, the Oracle case sparked a significant shift in compensation that can be awarded as a result of sexual harassment in the workplace. Employers must be aware of any kind of harassment, bullying or any incident, or the potential for it, in the workplace. This way, employers can protect their employees and also mitigate the risk of being held vicariously liable.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Key Takeaways
As an employer, there are severe consequences for not taking all reasonable steps to prevent or address workplace incidents, especially regarding harassment or bullying. One of these consequences is being held vicariously liable for the misconduct that took place. Therefore, it is essential to create workplace policies and ensure they are implemented correctly. Ultimately, it is not enough to just have the policies in your business.
If you need further advice on vicarious liability or assistance drafting your workplace policies, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Yes, you can. Vicarious liability means that one party can be held liable for the acts or omissions of another party. For example, in terms of an employment relationship, an employer can be held liable for their employee’s acts or omissions.
Having workplace policies is an excellent place to start. However, it is not enough to just have the policies in your business. You must ensure that you enforce them, conduct training concerning the policies and regularly review them.
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