Today’s correspondent says:
You often say employees don’t get sued. How far does the employer’s vicarious liability go when employees are negligent? It appears that … [A] Nursing Home Covid outbreak began with an unauthorised staff party on site where some workers attended when not rostered on and avoided protocols.
I cannot talk about specific cases but I can talk general principles.
For vicarious liability we’re talking about the liability to pay damages in response to a civil claim for compensation. That is important for a number of reasons.
In a civil claim (eg in negligence) the only remedy available is money. The court can order a defendant to pay damages; nothing else. So the first step is to only sue a defendant who can pay. There is no point throwing good money after bad by suing someone who cannot pay.
The point of damages is to compensate the person who has suffered a loss. To put them back in the position, as far as money can do it, that they would have been had the tort not been committed. It is not to punish the wrongdoer or even to express moral outrage at their conduct. Again there is no value suing a person who cannot pay but that is also where vicarious liability comes in. The law has developed this concept to ensure that a defendant who is more likely to be able to pay can be sued. In an earlier post (Trying – again – to put to bed a myth about vicariously liability (November 30, 2019)) I said:
The justification for vicarious liability is not easy to explain – as the judges of the High Court of Australia noted in Hollis v Vabu (2001) 207 CLR 21 ‘A fully satisfactory rationale for the imposition of vicarious liability in the employment relationship has been slow to appear in the case law’ (, Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ). Some justifications are that the point of liability is to ensure that a person who is injured is compensated. The ‘person’ that can best ensure that happens, either because they have the funds or the insurance policy, will be the business or government, not their employee. Whether the employer is a business or a government delivering government services, they reap the rewards of the person’s labour, they pay the wages granted but the employee is acting in the employer’s interest not their own. As the employer gets the benefit so too, they should take the risk. The employer is also responsible for selecting employees, training them, building the relevant culture that may or may not prioritise safety etc. All things that a person who engages with the business has no control over…
The point of vicarious liability is to ensure that a person who suffers a loss can recover compensation even when the employer has done everything, they can to avoid a risk. Remember schools can be held liable for the sexual assault of students by staff and clearly that is not part of their job –New South Wales v Lepore  HCA 4.
Further the Insurance Contracts Act 1994 (Cth) s 66 provides that where an employer claims on their insurance policy (in effect asking their insurer to defend the claim) the insurer cannot, serious and wilful misconduct excepted, look to the employee to repay the damages.
Let us assume that there is ‘serious and wilful misconduct’ and that may avoid vicarious liability. But the case that the defendant has to answer is the case that the plaintiff choses to bring – the court is not free to roam at large to find a legal remedy, the court sits as a referee to judge the case that the parties bring. Vicarious liability arises where it is alleged the employee was liable in the course of his or her employment. But an employer can be liable in his or her or its own right. A plaintiff might bring the action alleging that the employer was liable for negligently training or supervising or selecting its staff. That is not vicarious liability, that is direct liability.
It may be negligent to have a system whereby people can enter the building when not on duty or where a party can be held, and no-one noticed and had the authority to take action. At the end of the day the employer sets the culture of the institution so behaviour that is formally prohibited but in fact tolerated may indicate negligent management. That is the rationale behind modern WHS legislation and why responsibility for the culture can move up the chain of command.
If a person is vulnerable such as they are in a residential care facility, they depend on the operators to manage the facility in a way that is reasonably safe. If that doesn’t happen then they can look to the management and argue direct, not vicarious liability. At the end of the day where liability falls depends on all the circumstances and the case the plaintiff choses to bring. And they are going to bring the action against the agent who is most likely to have insurance for the obvious reason that suing anyone else is a waste of time effort and money.
How far does the employer’s vicarious liability go when employees are negligent? If employees are negligent in the course of their employment the employer is liable. What constitutes ‘the course of their employment’ or ‘serious and wilful misconduct’ remains to be tested in each case.