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Case law Businesses can be vicariously liable for wrongs committed

Businesses commissioning independent contractors to carry out work in a relationship 'akin to employment' - where their activities are closely connected to that quasi-employment - can be vicariously liable for wrongs committed by those contractors, particularly if the business controls the contractor's activities, a recent ruling makes clear.

September 2018

This update was published in Legal Alert - September 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A bank required new employees to undergo a medical examination. The doctor engaged to carry these out allegedly sexually assaulted a number of examinees. At issue was whether the bank was vicariously liable for his alleged actions.

Historically, a business is vicariously liable in law for the actions of an independent contractor, such as the doctor in this case, if:

  • The relationship between them is 'akin to employment', and
  • The wrong committed is sufficiently closely connected to that quasi employment

The bank argued that the first test was wrong. It said that the fact someone was an independent contractor should be a complete defence to a vicarious liability claim.

The Court of Appeal disagreed. It referred to a previous case in which the Supreme Court ruled that it was fair, just and reasonable to make a local authority vicariously liable for physical abuse of a child by foster parents with whom it had placed the child, even though there was no fault on the local authority's part.

The Court of Appeal said that even though the facts in that case were 'wildly different', the Supreme Court decision showed there could be situations involving independent contractors 'where vicarious liability will be established'.

It went on to find that the bank was vicariously liable for the doctor's actions, even though he was an independent contractor. It found that:

  • The purpose of the examinations was to benefit the bank by providing a medical assessment of a candidate's physical ability to do the job, which was integral to the bank's business. There could 'hardly be a clearer example' of an activity that was part of the bank's business
  • The examinations were under the bank's control: it specified the type of examination to be carried out, and set the standard formula for the doctor to use. The Court said this was 'perhaps the most critical factor'

While not asked to rule on whether the second part of the test was met, the Court's view was it that it was: carrying out the medical examinations were the whole reason the bank was in the relationship with the doctor.

Operative date

  • Now

Recommendation

  • Businesses commissioning independent contractors to carry out work in a relationship 'akin to employment', where their activities are closely connected to that quasi-employment, should take advice as to whether they could be vicariously liable for wrongs committed by those contractors, particularly if they control the contractors' activities

Case ref: Barclays Bank v Various Complainants [2018] EWCA Civ 1670

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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