Vicarious Liability of Employer

Vicarious liability of an employer means that an employer may be held legally responsible for a wrongful act committed by an employee in the course of employment, even though the employer did not personally commit the wrongful act.

The doctrine is based on the principle “qui facit per alium facit per se”—a person who acts through another is treated, in law, as acting himself.

In employment law, the central question is generally whether the employee's wrongful act had a sufficient connection with the employee's work or was committed in the course of employment.

1. Essential requirements

Generally, three elements are important:

1. Employer–employee relationship
   The wrongdoer must ordinarily be an employee or someone whose relationship with the defendant gives rise to vicarious liability.
2. Wrongful act by the employee
   There must be a tortious or otherwise legally actionable act or omission.
3. Connection with employment
   The act must have been committed in the course of employment or have a sufficiently close connection with the duties entrusted to the employee.

The employer is not automatically liable for every act committed by an employee.

2. Acts done in the course of employment

An employer can be liable where the employee performs an authorised task in an unauthorised or negligent manner.

For example, if a company driver is authorised to drive a company vehicle and negligently causes an accident while performing employment duties, the employer may be vicariously liable.

The important distinction is between:

• Unauthorised manner of doing an authorised act, and
• An act completely outside the employee's employment.

The first category can ordinarily attract vicarious liability; the second may not.

3. Employee's negligence

Negligence is one of the most common situations involving employer vicarious liability.

Suppose an employer assigns an employee to deliver documents using a company vehicle. If the employee drives carelessly while making the delivery and injures another person, the employer may be liable because the employee was performing an employment-related task.

The employer's personal absence from the scene does not by itself remove liability.

4. Employee acting for personal reasons

An employer may avoid vicarious liability where the employee has completely abandoned employment duties and is pursuing a purely personal objective.

This is sometimes described as the employee going “on a frolic of his own.”

However, courts examine the actual circumstances carefully. A temporary deviation from the authorised route or task does not necessarily end the course of employment.

The extent and purpose of the deviation are important.

5. Intentional wrongdoing by an employee

Vicarious liability is not restricted to accidental conduct.

An employer can sometimes be liable for an employee's intentional wrongdoing where the wrongful act is sufficiently connected with the employee's assigned duties.

This principle has become particularly important in cases involving:

• assault by employees;
• misuse of authority;
• harassment;
• abuse of customers;
• misconduct toward vulnerable persons; and
• workplace-related intentional torts.

The fact that the employer prohibited the conduct internally does not automatically answer the question of vicarious liability.

Important Case Laws

1. State Bank of India v. Shyama Devi (1978)

The Supreme Court considered whether a bank could be held responsible for fraudulent conduct committed by an employee.

The Court examined whether the employee's conduct was sufficiently connected with the employee's official duties. Where the employee acts outside the scope of employment for purely personal purposes, vicarious liability does not automatically arise.

Principle: The wrongful act must have a sufficient connection with the employee's employment.

2. Pushpabai Purshottam Udeshi v. Ranjit Ginning & Pressing Co. (1977)

This Supreme Court case concerned an accident involving a vehicle belonging to an employer.

The Court discussed the employer's vicarious liability for the negligence of an employee driving in the course of employment.

Principle: An employer may be liable for the negligence of an employee when the employee is acting within the scope of employment.

This case is an important authority concerning employer liability for employees operating vehicles during employment.

3. Sitaram Motilal Kalal v. Santanuprasad Jaishankar Bhatt (1966)

The Supreme Court considered the relationship between an employer, an employee and a person driving a vehicle.

The case emphasised that vicarious liability depends upon the relevant employment relationship and whether the wrongful act occurred in the course of employment.

Principle: The existence of a master-servant relationship and the connection of the wrongful act with employment are fundamental to vicarious liability.

4. State of Maharashtra v. Kanchanmala Vijaysing Shirke (1995)

A government employee was involved in a motor-vehicle accident while performing official duties.

The Supreme Court considered the State's responsibility for the employee's conduct.

Principle: An employer may be vicariously liable for negligent conduct of an employee while the employee is engaged in official employment, even where the employee acts contrary to instructions concerning the manner of performing the work.

This illustrates the distinction between an employee acting improperly while performing employment and an employee acting entirely outside employment.

5. N. Nagendra Rao & Co. v. State of Andhra Pradesh (1994)

The Supreme Court examined State liability for wrongful acts of government servants.

The Court discussed the broader principles governing liability of the State for tortious acts of its servants.

Principle: Government employment does not create an unrestricted immunity from liability for wrongful acts of government employees. The nature of the activity and applicable legal principles must be considered.

6. Limpus v. London General Omnibus Co. (1862)

This is a classic English case concerning an employee who was driving an omnibus.

The driver had been instructed not to obstruct competing vehicles but nevertheless did so and caused an accident.

The employer was held responsible because the employee was performing the employer's business, even though he had acted contrary to instructions.

Principle: An employer may be liable where the employee is doing an authorised employment activity in an unauthorised manner.

7. Joel v. Morison (1834)

This case established the famous “frolic of his own” principle.

The employee substantially departed from his employer's business for a personal purpose and caused damage.

Principle: Where an employee abandons the employer's business and embarks on a purely personal venture, the employer may escape vicarious liability.

8. Lister v. Hesley Hall Ltd. (2001)

The House of Lords considered intentional sexual abuse committed by a warden against children under his care.

The Court developed the close connection test, asking whether there was a sufficiently close connection between the employee's assigned duties and the wrongful conduct.

Principle: An employer may be vicariously liable for intentional wrongdoing where the employment materially created or facilitated the opportunity for the wrongful conduct and there is a sufficiently close connection between the employment and the wrong.

9. Mohamud v. Wm Morrison Supermarkets plc (2016)

A petrol-station employee assaulted a customer after an argument.

The UK Supreme Court applied the close-connection approach and considered:

1. What functions or field of activities were entrusted to the employee?
2. Was there a sufficient connection between those functions and the wrongful conduct?

Principle: Intentional misconduct can attract employer liability where the wrongful conduct is sufficiently connected with the employee's assigned activities.

6. Vicarious liability and HR/employment matters

For HR departments, the doctrine is particularly relevant to:

• workplace harassment;
• discrimination;
• employee assault;
• negligent supervision;
• misuse of company vehicles;
• unauthorised disclosure of information;
• wrongful treatment of customers;
• employee misconduct;
• workplace safety; and
• actions of managers and supervisors.

For example, if a manager harasses an employee while exercising managerial authority, the employer may face liability depending upon the applicable statute and facts. An employer therefore needs effective anti-harassment policies, reporting mechanisms, training, investigation procedures and disciplinary systems.

7. Vicarious liability vs personal liability

These concepts should be distinguished.

An employer can sometimes face both direct and vicarious liability.

For example, if an employee causes workplace harm and the employer also independently failed to maintain reasonable safety systems, the employer's own negligence may create direct liability in addition to any vicarious liability.

8. Defences and limitations

An employer may dispute vicarious liability where:

• the wrongdoer was not an employee;
• the employee was acting entirely outside employment;
• the employee had abandoned the employer's business;
• there was no sufficient connection between the wrongful act and employment;
• the relationship was that of an independent contractor rather than employee; or
• the relevant statutory requirements for liability are not satisfied.

However, “the employee violated company policy” is not necessarily a complete defence. An employee can breach instructions while still acting in the course of employment.

Conclusion

Vicarious liability makes an employer responsible, in appropriate circumstances, for wrongful acts committed by employees in the course of their employment. The central issue is the connection between the employee's wrongful conduct and the employment, rather than simply whether the employer authorised the precise wrongful act.

The major principles emerging from the cases are:

• An employer can be liable for an employee's negligence.
• An employee's violation of instructions does not automatically protect the employer.
• A completely personal act may fall outside the course of employment.
• Intentional wrongdoing can also generate vicarious liability where there is a sufficiently close connection with employment.
• The actual employment relationship and circumstances of the wrongdoing must be examined carefully.
• Employers should therefore maintain appropriate HR policies, supervision, training, grievance mechanisms and workplace-safety procedures.