21 December 2010

Employment news: Vicarious liability — even for theft

Claire Christy
Partner | UK

Employers would, on the whole, expect to be held responsible for anything that their employees may do in the course of their employment that has a direct, adverse consequence for a third party. However, the courts continue to interpret what is ‘in the course of employment' widely and, from time to time, in ways that may come as a surprise to many employers. This is particularly so where an employee has clearly acted illegally, even criminally, and in a way that an employer would say they could not have anticipated and would consider wholly unconnected with the employee's work. The most recent example is the Court of Appeal's decision in Brink's Global Services Inc and others v Igrox Ltd.

A theft after hours

The employer, Igrox, was contracted to fumigate a container containing silver bars, prior to shipping. In fact, Igrox's employees failed to fumigate the box, but in any event sealed the container as if they had done so. One of the employees later returned to the container and stole 15 silver bars.

Igrox argued that the fact that the employee had left the site and had later returned to steal the silver bars meant that this was unconnected to his employment. They relied on an established principle that there is an important distinction between whether an employer has merely provided an opportunity for an employee to act nefariously (in this case, to steal) and the employee acting in the course of employment.

However, the Court rejected Igrox's argument and held that a theft by an employee “from the very container which he [was] instructed to fumigate” was sufficiently closely connected to the purpose for which he was employed to make Igrox vicariously liable for his actions.

Previous cases have held that employers can be liable for unlawful acts performed by their employees if the act can be seen as a risk that is reasonably incidental to what the employee is paid to do. This has led to a children's home being held liable for abuse by a warden of boys in his care and a rugby club being found liable for an assault by one if its players during the course of a match. This new case confirms this trend.  

Practical tips

In some circumstances, the provision of adequate training may assist an employers' defence – arguing that they have done all they reasonably could to avoid the risk. So employers should carefully assess the ways in which employees may expose them to the risks of liability to third parties, whether on the employer's own premises or ‘off-site', and provide employees with appropriate training, instruction and supervision.

However, in many cases, no amount of training and supervision will mitigate against the risk of a successful claim. Employers must therefore have adequate insurance in place to cover their liability in such cases.

Claire Christy Partner | London

Category: Article