Vicarious Liability Essays

Vicarious Liability Essays Vicarious Liability Essay Vicarious Liability Essay Seminar 7 Vicarious Liability The problem question deals mainly with the issue of Vicarious Liability and Negligence. In order to advise Jerry one would have to explore the rules of vicarious liability, relevant statute law and case law which may apply. Vicarious liability has been defined as the person who commits a wrong must be an employee and not an independent contractor, the employee must have committed a tort and the tort must have been in the course of employment. The doctrine of ‘vicarious liability’ is a public policy that holds employers liable when a tort is committed by an employee in the course of their employment. This means that a victim of a tort can claim compensation from the employee’s company if it is proven to have been the employee’s fault that the tort occurred. There are three elements to the doctrine of vicarious liability, where the ‘employee and not an independent contractor’, ‘commits a tort’ and ‘in the course of employment’. 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. In order to determine who is an employee versus who is an independent contractor, this is illustrated the case of Yewens v. Noakes (1880) 6 QBD, were the respondent was a hop merchant and possessed houses which had internal communication throughout, and were used for the purposes of his trade. K lived in the houses in order to take care of them, and he was a clerk and was paid a salary of ? 150 a year. He resided in the houses together with his wife, children, and servant. It was held that K was not ‘a servant or other person’ within Revenue Act 1868 (c 28) s 11 (repealed), and Bramwell LJ stated that â€Å"a servant is a person subject to the command of his master as to the manner in which he shall do his work. This case set out what was known as the ‘Control Test’ by way of stating who was an employee and how that employee was controlled by his master. For example, an employee could be controlled in the way he preformed his duties, such as cutting the vegetables this way, holding the knife that way. However, this test became one where it could no longer control how employees preformed their duties, given that one can direct an employee to do a task, but could no longer command an employee to do it in a certain way due not having the particular skill needed to carry out the task. For example, an employer could direct a doctor to operate on a patient but not be able to control how that operation is preformed given that the employer may not posses that particular skill. The integration test was established in Stevenson v McDonald (1969) and 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 someone who has come in to fix a till, then they will be seen by the courts as a independent contractor. Lord Denning stated that One feature which seems to run through the instances is that, under a contract of services, a man is employed as part of the business and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it. This refined the control test in order to determine the differences between being an employee and an independent contractor. The multiple test was applied in the Ready Mixed Concrete Ltd v Minister of Pensions and National Insurance (1968) where it looked at the contractual relationship between the 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 they incur for tax reductions, then the individual is ore 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. In this case it was held that the driver was an independent contractor. However in the case of Market Investigations Ltd v Minister of Social Security [1969] 2QB173 Cooke J’s judgment was that â€Å"The fundamental test to be applied is this: †Is the person who has engaged himself to perform these services performing them as a person in business on his own account? This was been determined by using a mix of factors: for example, does the employee provide his own equipment and does he hires his own helpers? It also looks at what degree of financial risk he takes and to what degree of responsibility he has. It also takes into account how the employee is paid and whether the employee can work for another. In this case it was held that Mrs Irving was employed under a series of contracts of service and therefore was an employee of the company. Although, Jerry regards Peter as self-employed within his organisation, it would be fair to state that given the control test above, Jerry does have control over Peter by stating that if ever Peter is not available when he wants him he will never employ him again. Peter is free to work for others but does not do so. Therefore the case of Yewens v. Noakes (1880) 6 QBD demonstrates the control that Jerry has over Peter. The Integration Test would also show that Peter could be an integral part of the business given that he does a service rather than offers one. This was made clear in the above case of Stevenson v McDonald (1969) where Lord Denning noted the differences between an employee and an independent contractor. Although this new test sets out the real differences, the old test could still hold some merit if the employee is controlled in such a way as to be a servant rather than an accessory to the business. Therefore, if Peter is an employee rather than an accessory to the business this would be examined by the more modern multiple test. This test looks at other factors which don’t arise in the older tests. The courts would look as to whether Peter used his own equipment and how he is paid as stated above. Peter does not use his own equipment as he does his deliveries on a motorcycle wearing a uniform provided by Jerry. He is also paid a basic weekly wage, or retainer, plus an hourly rate for every hour actually worked. Based on this and the case of Market Investigations Ltd v Minister of Social Security [1969] 2QB173 it would be clear that Peter is in fact employed by Jerry under contracts of service and therefore is an employee of the company. Once it is established that a relationship of employer and employee exists, it is then necessary to establish as to whether a tort has been committed in the course of employment. A test formulated by John William Salmond 100 years ago stated that an employer will be held liable for either a wrongful act they have authorised, or a wrongful and unauthorised mode of an act that was authorised. The courts tend to favor this test as there are no other suitable tests available and the courts usually rely upon precedent, and the facts of each individual case. An illustration of the test is provided by two contrasting cases. In the case of Limpus v London General Omnibus Company where a driver pulled out in front of another rival omnibus, in order to obstruct it. Despite having expressed prohibitions, the employer was found liable. This was classified as an unauthorised act of the employee carrying out his duties, which was driving and not an entirely new activity. Whereas in the case of Beard v London General Omnibus Company, a conductor was employed to collect fares on board the bus and, thinking he was doing the driver a favor, he negligently chose to drive the bus. This was completely outside of his duties as a conductor. Given the above Peter committed the tort of negligence in the course of employment and although the act was unauthorised it was not outside the course of his duties. Therefore Jerry would be vicariously liable to the claimants.