In two recent cases with very different facts, the Court of Appeal has made findings of vicarious liability against employers for employee misconduct outside the workplace/outside working hours. Employment and Retail specialist Shakeel Dad explains and offers practical advice.
What is vicarious liability?
“Vicarious liability” is a legal concept under which employers can be found liable for the wrongful acts of their employees where there is a sufficient connection with the employee’s employment, such that it would be fair to hold the employer vicariously liable. This involves the court asking:
- What duties/activities were entrusted to the employee?
- Was there sufficient connection between the employee’s position and the wrongful conduct so as to make it just and reasonable  for there to be vicarious liability?
Bellman v Northampton Recruitment  EWCA Civ 2214
In December 2011, Northampton Recruitment Ltd held its Christmas party at a golf club. The party was attended by many staff including a sales manager called Mr Bellman and the company’s managing director, Mr Major. The party ended at around midnight, but some staff took taxis to a hotel bar (paid for by the company) and continued drinking. At around 3 am Mr Major and Mr Bellman became involved in an argument about work and how things should be done. Mr Major punched Mr Bellman twice which led to Mr Bellman falling and hitting his head on the ground. Mr Bellman’s skull was fractured, leading to severe brain damage. Mr Bellman sued the company on the basis of vicarious liability.
The Court of Appeal found for Mr Bellman, deciding that there was a sufficient connection between the employment and the assault because:
- Mr Major was the MD of the company and was very autonomous and dominant in this role.
- The Christmas party had been paid for and organised by Mr Major.
- Mr Major had offered to pay for taxis to take staff to the nearby hotel bar after the formal party ended.
- At the hotel bar, the company paid for the majority of the drinks consumed.
- The attack occurred immediately after an altercation about work because Mr Major had become angry that his decisions were being questioned.
- Mr Major had made comments to the staff whilst at the bar that the company was ‘his business’, he paid their wages and he got to make the decisions.
The Court of Appeal held that even if Mr Major had “taken off his managerial hat” when he first arrived at the hotel bar, he “chose to don it once more and to re-engage his wide remit as managing director and to misuse his position when his managerial decisions were challenged”.
WM Morrison Supermarkets Plc v Various Claimants  EWCA Civ 2339
In the Morrisons case, the supermarket has lost its appeal against a High Court ruling that it is vicariously liable for the actions of one of its former employees who deliberately leaked payroll data relating to almost 100,000 employees.
Morrisons submitted on appeal that the sufficient connection test was not satisfied, since the wrongdoing that caused the harm was done by the individual at his home, using his own computer, on a Sunday, several weeks after he had downloaded the data at work on to his personal USB stick. However the Court of Appeal agreed with the High Court that there was an “unbroken thread” linking the individual’s work to the disclosure of the data.
Morrisons also argued that to impose vicarious liability on Morrisons in circumstances where the individual’s motive was to harm Morrisons would render the court an accessory in furthering his criminal aims, but this was dismissed by the Court of Appeal on the basis that motive is irrelevant to vicarious liability and there is no such exception where the motive is to cause financial or reputational damage to the employer.
The Court of Appeal also gave short shrift to the submission that, given the number of employees affected, a finding of vicarious liability would place an enormous burden on Morrisons (and on other innocent employers in future cases).
Further proceedings are due to take place to determine the level of compensation. Morrisons has said that it will appeal to the Supreme Court.
Conclusions and practical lessons
These two very different cases highlight to employers both the increasingly wide reach of the vicarious liability ‘sufficient connection’ test and the hugely varying, potentially even unlimited, factual scenarios in which such a claim could arise. But are there any practical lessons for employers to take away?
The Bellman case was an unusual case of a Managing Director trying to assert his authority by using physical aggression outside of work. It does not set a precedent that vicarious liability will always arise from an assault after two colleagues get into a drunken argument about work because it will always depend on the specific facts of the case. To emphasise this point, the Court of Appeal stated that its decision was “not authority for the proposition that employers become insurers for violent acts by their employees”. Nonetheless, the decision does make it clear that employers can be vicariously liable for wrongful acts outside of the normal employment environment and this could, in certain circumstances, include a senior employee trying to pull rank through the use of aggression or violence.
In the run up to the festive season, it is worth reminding staff that any harassment, verbal or physical aggression either at the party or at any ‘after-party’ could lead to disciplinary consequences including dismissal. It is well documented that excessive alcohol consumption is linked to violence so limiting the amount of free alcohol available or paid for by the company at the event is always advisable, unpopular as this may be!
It would be prudent, in light of the Morrisons decision, for employers to review their existing policies and procedures and to consider imposing strict[er] internal controls to guard against the risk of employees ‘going rogue’ – especially in those parts of the business where employees are regularly entrusted with personal data and confidential or sensitive information.
Finally, employers should check the terms of their insurance to ensure that the business is adequately protected, should any vicarious liability claim arise.
 In Mohamud v WM Morrison Supermarkets plc  UKSC 11 the Supreme Court said that the question of whether it is ‘just and reasonable for there to be vicarious liability’ should be considered in line with the principle that businesses should bear the loss caused by business related risks materialising, including the risk of an employee misusing his or her position.