Did you know? If an at-fault third party was completing a task in the course of, or connected with their employment, recovery of an insured’s loss should be pursued against both the at-fault third party and the third party’s employer on the basis that the third party employer is “vicariously liable” for the acts or omissions of its employee.
Vicarious liability is the liability of a person (in this example, the employer) for the wrongdoing of another, even if the employer has done nothing wrong.
Several tests were considered by the Court of Appeal of Victoria in Blake v J R Perry Nominees Pty Ltd [2012] VSCA 122 in considering whether an employer is vicariously liable, including:
- Sufficient Relation: The wrongful act must sufficiently relate to the conduct authorised by the employer.
- Close connection: The wrongful act must be closely connected with the employee’s duties, making it fair to hold the employer vicariously liable.
- Deliberate Wrongs: Vicarious liability can be imposed for deliberate wrongs if the employer is estopped from asserting that its employee was not acting as their servant, agent or representative when the acts occurred.
- Employer’s interests: The wrongful act must have been performed intentionally in the employer’s interests.
To establish that a party (employer) is vicariously liable for the conduct of an at-fault third party, it is essential to demonstrate that the wrongful act resulted directly from the at-fault third party’s role with the employer. The Court confirmed that employers will not be found vicariously liable unless:
- The employer authorised the (wrongful) act, either expressly or impliedly.
- The act was closely connected to the employee’s duties.
- The act was performed in the employer’s interests.
Understanding these principles is crucial when evaluating claims involving businesses and their employees.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.
