A2 law: tort: Vicarious Liability Question.
Vicarious liability arises when one party is responsible for the tort of another. This
situation occurs frequently when an employer is held responsible for the torts
committed by an employee. An employer can only be held responsible for the torts of
an employee, not for an independent contractor.
There are 3 tests to establish whether an individual is an employee or an independent
contractor these are the control test, integration test and the economic reality test,
which is also known as the multiple test.
The control test analyses who has control over the way that the work is carried out. If
the employer sets out how the work is to be done and when it is to be done by then the
courts are more likely to consider the person carrying out the work as an employee.
However, if it is up to the person carrying out the work how to determine how and
when it should be done, then that person is more likely to be considered an
independent contractor by the courts and is therefore responsible for their own torts.
This test was applied in Mersey docks v Coggins Ltd (1947)
The integration test looks at whether the person’s work is an integral part of the
business. If they are an integral part of a business for example a till worker, then they
are more likely to be seen as an employee to the courts. If they are not seen as an
integral part of the business for example some one who has come in to fix a till, then
they will be seen by the courts as a independent contractor. This test was established
in Stevenson v McDonald (1969).
The economic reality test looks at the contractual relationship between the defending
two parties. An individual who has a contract of service is more likely to be seen as an
employee by the courts. Whereas, an individual who has a contract for services, is
more likely to be seen as an independent contractor. The courts may also look at the
way an individual is paid. If an individual is paid a salary and the person they are
working for makes tax reductions, then the individual is more likely to be seen as an
employee. If however, the person is paid a lump sum and has to make their own
reduction they are more likely to be seen as an independent contractor. There are also
elements to consider which are inconsistent with a contract of employment, which
includes; the ability to hire own employees, requirement that you provide your own
tools and materials and that you pay your own tax and national insurance. This test
was applied in the Ready Mixed Concrete Ltd v Minister of Pensions and
National Insurance (1968) where it was held that the driver was an independent
contractor.
Vicarious liability applies when an employer is said to have authorised a tortious act
like in the case of Poland v Parr (1927). It also applies when an employer carries out
an unauthorised act during the course of employment. Another time when vicarious
liability applies is when an employee carries out an expressly forbidden act but one
that is of benefit to the employer such as in the case of Rose v Plenty (1976).
Employer’s indemnity can also destroy the purpose of vicarious liability as an
employer can actually sue the employee for indemnity. Another issue is that the
claimant can actually sue either the employer or the employee, as the employer and
employer are joint tortfeasers. In the case of Lister v Romford Ice and Cold Storage
Ltd (1957), the insurers then sued the employee. Since the case, insurers do not
generally exercise this right.
Barry has certainly committed a tortious act as he has negligently run over the
warehouseman. However, the issue that arises now is whether he can be sued or the
company. In order for this to be discovered it must be decided whether Barry is an
employee of Dodgy Transport, in which case the employer will be held liable, or if he
is an independent contractor, in which case he will be liable for his own tortious
actions.
Applying the Control Test it would appear that Dodgy Transport have control, which
would make Barry an employee and Dodgy Transport therefore liable. It is evident
that Dodgy has control as they decide what type of jobs Barry takes, who for, and
when. This test was used in Mersey docks v Coggins Ltd (1947).
When using the integration test it is clear that Barry is an integral part of Dodgy
Transport as he ‘transports’ or delivers goods and is thus an employee.
The Economic Reality Test can also be used to decide whether Barry is an employee.
Since Barry has signed a document of service, this would also suggest that he is an
employee as it is a document for service and not for services. Another element is that
the company supplies him with the necessary equipment to carry out his job i.e. the
van he drives to make the deliveries for the company. This is different from the
Ready Mixed Concrete Ltd v Minister of Pensions and National Insurance (1968
as Barry doesn’t have a hire-purchase agreement with the company in order to use the
van. This therefore suggests that Barry is an employee. However the fact that the
company pays him a gross amount and he has to make tax and national insurance
reductions would suggest that he is an independent contractor. However, on the
balance of the other elements so far stated it would appear that Barry is more like an
employee then an independent contractor.
Vicarious liability can be applied to employers when an employee commits a tortuous
act while conducting an authorised act. Barry may have delivered a parcel for the
other company Rocky Co but it was still a delivery. It can therefore be seen to be an
authorised act like in the case of Poland v Parr (1927), the employer can therefore
be held liable for this tortuous act. If Barry had done something that could not be
described as falling under his work then it is more likely that he would be found
personally liable like in the case of Makanjuola v Metropolitan Police
Commissioner (1992).
Vicarious liability can also be applied when an employee commits a tortuous act
while doing an act that was not authorised by the employer. In the document of
service Barry signed it stated that he couldn’t accept work from any other delivery
business. If we take this a stage further and say Barry isn’t allowed to take work from
anybody else unless it has been authorised by Dodgy then it is clear that he committed
an unauthorised act. The employer would therefore be found liable.
Vicarious liability can also be applied when an employee commits a tortuous crime
whilst doing something that was expressly forbidden by the employer, if it was
beneficial to the employer. Barry was expressly forbidden to work for anybody else
unless told to by Dodgy like in Limpus v London General omnibus (1862).
However, it can be argued that it benefited the employer like in rose v plenty (1946),
as he got money for the work that Barry provided. In both these cases the employers
were held liable. It is therefore highly probable that Dodgy would also be found
liable. If however it could be justified that Barry was on a frolic of his own like in
Hilton v Thomas Burton (1961) then Barry would be held liable. After using all
three test and other elements, it is highly probable that Dodgy would be held liable for
Barry’s tortuous act.
However, the insurers could seek employees indemnity like in the case of Lister v
Romford Ltd (1957) , from Barry to regain some or even all of the costs, although,
this is highly unlikely as this destroys the purpose of vicarious liability.