Vicarious liability - Employer's right to indemnity

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Overview

Vicarious liability is a key concept in tort law that makes employers responsible for the wrongful acts of their employees. This idea is important for future legal professionals as it forms a critical part of employment law and tort liability. For those studying for the SQE1 FLK1 exam, a solid understanding of vicarious liability and the employer's right to indemnity is vital. This article examines these ideas, offering an understanding of principles, case law, and practical examples relevant to both the exam and legal practice.

Basic Principles of Vicarious Liability

Vicarious liability follows the concept of respondeat superior, meaning "let the supervisor answer." Three conditions must be met:

  1. Employment Relationship: The person who committed the act must be an employee, not an independent contractor, requiring careful review of their working relationship.

  2. Commission of a Tort: The employee must have committed a wrongful act, such as negligence or defamation.

  3. Within the Course of Employment: The wrongful act must occur during employment and be related to job duties.

Employment Relationship Test

Determining whether someone is an employee or independent contractor is often critical. Courts typically consider:

  • Control over activities
  • The worker's role within the organization
  • Economic realities
  • Mutual obligations between the parties

Example: A law firm employs solicitors and hires external barristers. If a solicitor gives incorrect legal advice, the firm is likely responsible. However, the firm may not be liable for a barrister's mistake, as barristers are typically contractors.

Key Case Law and Legal Developments

Understanding how case law has shaped vicarious liability helps illustrate its current application.

Lister v Hesley Hall [2001] UKHL 22

This case created the "close connection" test, broadening vicarious liability.

  • Facts: Sexual abuse by a school warden.
  • Ruling: The school was held liable due to the close connection between the warden's actions and his job.
  • Impact: Shifted focus to the connection between the wrongful act and employment duties.

Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11

This case refined the "close connection" test.

  • Facts: An employee assaulted a customer.
  • Ruling: The employer was held liable as the act was within the employee's job activities.

Various Claimants v Barclays Bank plc [2020] UKSC 13

This case clarified the distinction between employees and contractors.

  • Facts: Medical exams by a self-employed doctor for the bank.
  • Ruling: Barclays was not liable since the doctor was a contractor.

Determining Employment Scope

Deciding if an act falls within "employment scope" is often complex. Courts weigh:

  1. Nature of the Act: Is it related to the job?
  2. Time and Place: Did it happen during work hours and location?
  3. Purpose: Was it for the employer's benefit?

The Salmond Test

Traditionally, an employer is liable if the act was either authorized or an unauthorized method of doing an authorized act. Modern law has expanded this to include actions closely tied to job duties.

Example: A nightclub security guard uses excessive force. Though forbidden, it's linked to his duties. The nightclub may be liable.

Intentional Wrongful Acts

Courts have become more willing to impose liability for intentional wrongdoing.

Factors Considered

  • Connection between act and job duties
  • Abuse of position
  • Employer's potential risk creation

Case Study: In Bellman v Northampton Recruitment Ltd [2018], a company was liable for an assault by its managing director at a work event because he was acting as a director.

Employer's Right to Indemnity

Employers can seek reimbursement from employees whose actions lead to liability.

Legal Basis for Indemnity

  • Express Terms: Clauses in contracts
  • Implied Terms: Based on employment nature
  • Equitable Principles: May require indemnity in certain cases

Limitations

  • Public policy considerations
  • Employee's financial capacity

Example: A financial advisor gives fraudulent advice, causing losses. The firm could seek indemnity, but the advisor's lack of assets might limit recovery.

Conclusion

Understanding vicarious liability and indemnity is key for success in the SQE1 FLK1 exam and future practice. Key points include:

  1. Conditions for vicarious liability: employment relationship, tort commission, and employment scope.
  2. The "close connection" test's role.
  3. Expanding liability for intentional wrongs.
  4. Employer indemnity potential versus practical limitations.
  5. Challenges in applying these principles to modern employment scenarios.

By gaining proficiency in these elements and their practical use, candidates can confidently tackle complex tort issues in exams and legal careers.