21 Aug VICARIOUS LIABILITY: HIGH COURT CLARIFIES SCOPE OF LIABILITY FOR EMPLOYERS

Vicarious liability is a doctrine that imposes liability on employers for the negligent or wrongful actions of their employees within the scope of employment.  This principle is grounded in both common law and statutory provisions.  Generally, it serves as a safeguard against the adverse consequences of employees’ actions, particularly in cases involving harassment, discrimination, or injuries occurring in the workplace.

In the recent case of CCIG Investments Pty Ltd v Schokman [2023] HCA 21 (“CCIG Case”), the High Court considered the scope of vicarious liability.  Ultimately, the High Court found that the employer was not liable for the actions of its employee who inadvertently aggravated his colleague’s pre-existing psychological conditions.  This case reinforces that when considering whether an employer is vicariously liable for an employee’s wrongful conduct, the scope of the employee’s employment is crucial, including identifying what the employee was actually employed to do.

In the CCIG Case, Mr Hewett and Mr Schokman were both employees of CCIG Investments Pty Ltd (“the Employer”). They had been living in shared accommodation services provided by the Employer on Daydream Island. Early on 7 November 2016, Mr Schokman was awoken in a distressed condition and was unable to breathe as Mr Hewett urinated on his face. Mr Hewett was intoxicated, having been drinking at the staff bar. Whilst Mr Schokman had suffered from cataplexy and narcolepsy prior to the incident, both of these conditions were well-managed.  However, Mr Hewett’s actions of urinating on Mr Schokman during his sleep exacerbated these medical conditions, leading to a whole person impairment in the range of 10% to 20%, post-traumatic stress disorder and an adjustment disorder with mixed anxiety and depressed mood.

Mr Schokman brought proceedings against the Employer, claiming that the Employer was vicariously liable for the negligent act of Mr Hewett because that act was done in the course or scope of his employment.

The ruling by the High Court focused on this element that defines vicarious liability, noting the course of employment comprises of:

• the acts of an employee that are authorised (whether directed, permitted or ratified by the employer expressly or impliedly); and

• unauthorised acts that have some sufficient connection to the work that the employee is employed to do, so that the conduct may be treated as occurring in the course of employment.

The Queensland Court of Appeal initially held that the employer’s requirement for Mr Hewett to share accommodation, coupled with his contractual obligation to ensure the health and safety of others, established the requisite connection for vicarious liability. However, the High Court diverged from this interpretation, stating that Mr Hewett’s actions were unrelated to his job responsibilities. The shared accommodation only facilitated physical proximity between the Employer and Mr Hewitt (creating the environment in which the incident occurred), rather than being directly connected to the scope of employment.

This case highlights the complexity of vicarious liability cases and provides essential lessons for employers including:

• Employers should have well-drafted employment contracts and position descriptions that clearly define an employee’s role and responsibilities, including when and where work is performed.

• Employers should establish and communicate expectations through comprehensive policies and procedures and ensure that employees and managers are adequately trained and informed about these policies.

Do you provide staff accommodation for your employees?  If you are wanting to ensure that your employment contracts and position descriptions clearly set boundaries regarding where work is and is not performed, HR Law can review these for you.  Contact us today on (07) 3211 3350.

To read the case, click here.

To read the High Court’s announcement, click here.

The content of this article is intended to provide a general guide to the subject matter.  Specialist advice should be sought about your specific circumstances.