Generally speaking, an employer is liable for the acts of their employees, in the course of their employment, under the principle of vicarious liability. As such if an employee injures a customer they can claim against the employer.
Where the service provider isn’t an employee then things become more complex. The principle of vicarious liability can be extended to relationships that are not employment but “akin to employment”. Legal advice should always be sought in this regard. On the face of it if an independent contractor injures a customer their claim should be against the independent contractor and not the principal business (who engaged the contractor). However, with these sorts of arrangements the customer is often oblivious as to the business arrangement between the principal business and the independent contractor and may assume they are one and the same thing. As such the principal business will be in the firing line.
When it comes to applying the "akin to employment" test, the court will carefully consider which aspects of the relationship are similar to or different to an employment arrangement. These may include:
- Whether the work is being paid for in money or in kind.
- How integral to the organisation is the work carried out by the contractor.
- The extent of the principal business’ control over the contractor in carrying out the work.
- Whether the work is being carried out for the principal business’ benefit or in furtherance of the
- aims of the organisation.
- The arrangement regarding appointment and termination of the contractor.
- Whether the contractor’s role fits within a hierarchy of seniority within the principal business.
Clearly the more similarities there are between the engagement of the contractor and a contract of employment, the more likely it is that the court will consider the principal business to be vicariously liable for the acts of the contractor.
There are, of course, various complexities and nuances relating to vicarious liability, and a recent case explored whether the “new” employer was liable for the actions of an employee whilst employed by the “old” employer, when the employee subsequently passed to the new employer under the Transfer of Undertakings (Protection of Employment) regulations 2006 (TUPE).
In this case, the claimant brought a personal injury claim in relation to injuries suffered while she was a patient at a hospital which was owned and operated by the first defendant (the old employer). She argued that the first defendant was vicariously liable for the negligent acts of two of its employees. Subsequent to the injuries occurring, the two employees in question transferred, under TUPE, so were currently employed by the second defendant (the new employer). The court was asked to decide whether any vicarious liability of the old employer for the alleged negligence of its employees passed to the new employer under TUPE. The court was also asked, if it decided that vicarious liability did pass, would any indemnity that the old employer might have had under its public liability insurance also transfer to the new employer.
Whilst the High Court’s reasoning, as ever with the law, was complex, in a nutshell, it felt that TUPE was essentially designed to protect employees in the event of a change of employer, and was not intended to cover situations such as this where, in fact, any potential liability was to a third party. As such the High Court decision was that an old employer’s vicarious liability for torts committed by its employees prior to a transfer does not pass to the new employer under TUPE.