Vicarious liability: defending your business against claims

Many of you will have read with interest, and perhaps a degree of surprise, our report on the Supreme Court’s decision in Mohamud v WM Morrison Supermarkets plc.  In this case the Court concluded that the “close connection” test was the right approach when considering an employer’s vicarious liability for the acts of its employees.  

In summary, an employee of the supermarket working in one of its petrol stations kiosks, was asked by M (a customer) whether he could print some documents. The employee then subjected M to verbal and physical abuse outside on the forecourt, including the use of what was reported to have been racist language. The Supreme Court held that whilst the employee’s behaviour was a “gross abuse of his position… [it] was in connection with the business in which he was employed to serve customers.”

The Supreme Court’s decision shows how wide the scope is for an employee’s actions to be brought within the ambit of that for which their employer can be held vicariously liable. It also illustrates how far removed that conduct can be from something done for the employer’s benefit.

You may well be familiar with the concept of ‘vicarious liability’ in an employment context, where employers can be liable for any unlawful discrimination by their employees where that arises in the course of employment.

In this context, in some circumstances, the Equality Act 2010 allows employers to rely on the ‘statutory defence’. Essentially, the employer may avoid liability by arguing that it took ‘reasonable steps’ to prevent the discrimination taking place.

Unfortunately, in the context of personal injury claims (as in Mohamud) employers cannot rely on the “statutory defence” to avoid liability.  If the Court decides that there is a ‘close connection’ between the employee’s wrongful conduct and their employment it is very difficult for an employer to argue that they should not be liable for personal injury. This case seems to broaden the circumstances in which this type of liability might arise.  

However the case is a clear reminder of the need to manage the risks which can arise in an employment context and the need to be constantly mindful of what your business is doing to deter discrimination and other unacceptable behaviour. While the argument that you have taken ‘all reasonable steps’ is not strictly relevant in a personal injury claim such as Mohamud, putting in place the type of protections that would underpin a successful ‘statutory defence’ to a discrimination claim will hopefully reduce the risks of a personal injury claim arising. 

Whilst it is difficult to foresee many steps that could have been taken by the supermarket in the Mohamud case which could have prevented what happened, there are nevertheless a number of practical steps which we suggest would go some way to reducing and managing the risk of a successful discrimination claim if one was brought along similar facts (for example if the dispute had been between two employees).

In defence of a discrimination claim, employers are able to argue that they have taken ‘all reasonable steps. These are many and varied and it is impossible to provide an exhaustive list, but the following commonly feature and are, in our view, likely to be persuasive:

• Ensuring that your Staff Handbook or similar documentation contains an appropriate Equal Opportunities/Diversity Policy which sets out what you expect of your employees in the context of their interactions with their colleagues, customers, suppliers etc.
• Clearly warning employees that any unlawful discrimination is treated with utmost seriousness and is likely to be deemed to be gross misconduct (with appropriate references being made in the Equal Opportunities Policy and Grievance and Disciplinary Procedures).
• Making sure that all employees are familiar with the Equal Opportunities Policy (or any other relevant policies or rules) which are intended to prevent unlawful discrimination, bullying and harassment.
• Keeping adequate and up to date records which can be used to demonstrate that employees are aware of policies and procedures.
• Providing training to employees on equal opportunities and the Policy, and refreshing that training at regular intervals. As above, records should be maintained.
• Handling complaints in prompt fashion and treating them with the priority and seriousness that they deserve.
• Keeping an open mind when conducting investigations and treating the complainant with empathy, whilst always ensuring that the investigation progresses and difficult lines of enquiry are properly addressed rather than swept under the carpet.

Conducting a review after the conclusion of an investigation, identifying learning points and putting actions in place where appropriate to prevent future instances.

It is important to remember that an Equal Opportunities Policy which sets the standards of conduct for employees, but which has not been adequately communicated to staff, is likely to attract criticism from an Employment Tribunal similar to having no Policy at all.

You will see that much of the focus above is on training and pro-active management. We recommend that this process commences at the start of employment and is included within induction material, and then continued throughout the course of employment.

In short, the profile of an Equal Opportunities Policy needs to be raised and brought to ‘life’ within the workplace in order to best manage the risks arising from any unlawful ‘rogue’ behaviours.