Vicarious Liability and Relationships Akin to Employment

It is a well-established principle of employment law that employees are vicariously liable for certain acts by their employees. However, in November 2024, the High Court handed down a decision that found that vicarious liability does not exist in ‘relationships akin to employment’. This page outlines the implications of the decision for vicarious liability and relationships akin to employment.

What is vicarious liability?

Under the doctrine of vicarious liability, employers are liable for the torts of their employees if those torts are committed within the course of their employment. This means that if an employee commits a tort while doing the duties that they have been authorised to do and someone is injured, or suffers a loss, as a result, the injured party may sue the employer. An employee may be authorised to do an act expressly or by implication.

When an employer is vicariously liable for a tort committed by an employee, the employee is also liable.

An employer may avoid being found to be vicariously liable if they can show that they took all reasonable steps to prevent the employee behaviour that is the subject of the claim.

Employees vs contractors

One of the most crucial differences between an employee and a contractor, is that a company using contractors is not vicariously liable for the actions of those individuals.

While an employee carries out work under the supervision and at the direction of their employer, a contractor operates more independently and is not subject to the supervision and control of the principal.

For this reason, when a tort is committed by a contractor, only the contractor and not the principal, in liable.

Bird vs DP (a Pseudonym) 2024

In the matter of Bird v DP, the Roman Catholic Diocese of Ballarat appealed to the High Court against a finding by the Supreme Court of Victoria that the Diocese was vicariously liable for sexual assaults committed by one of its priests.

DP had been abused by Father Coffey, an assistant parish priest, in his home in 1971 during two pastoral visits when he was aged five. Father Coffey was not an employee of the Diocese, nor was he a contractor or an agent; rather, his relationship with the Diocese was governed by Canon law.

Father Coffey was supervised by the parish priest, who reported to the Bishop. The Diocese and Bishop did not exercise any direct control over his hours of work, day to day tasks or the manner in which those tasks were carried out. However, they did control the parametres of his appointment including matters such as the location and duration of his appointment and his general duties.

The Supreme Court accepted the plaintiff’s argument that the relationship between Father Coffey and the Diocese was one akin to employment and that as such it gave rise to vicarious liability. The Diocese appealed against this finding, arguing that it was not vicariously liable for Father Coffey’s acts as it was not his employer.  

The High Court considered whether the priest’s relationship with the Diocese could give rise to vicarious liability in the absence of an employment relationship. The court found that the principles of vicarious liability are limited to employment relationships, with courts having consistently refused to extend it to other categories of relationship such as contractor and principal. Expanding the doctrine to relationships akin to employment would lead to uncertainty and indeterminacy.     

Implications for relationships akin to employment

The High Court’s decision means that the Catholic Church will not be held legally responsible for sexual abuse committed in circumstances where there was no employment relationship, such as where priests are appointed under Canon Law. The decision also makes it clear that vicarious liability will not be found to exist in other relationships akin to employment, where there is no employment contract, such as in volunteer relationships.  

However, in many cases involving torts that occurs outside of an employment relationship, there will be other mechanisms available for holding individuals and entities responsible and seeking compensation.

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