Vicarious Liability (NT)
In the Northern Territory, an employer has vicarious liability for their employees’ actions committed during the course of their employment. This means that an employer may be legally accountable for their employees’ actions. However, there are exceptions to this rule. This article explains the nature of vicarious liability and the exception for employers in the Northern Territory.
What is vicarious liability?
Vicarious liability means that one party can be held legally culpable for the actions of someone else. Under this law, an employer can be liable for the negligent acts or behaviour of an employee “in the course of employment”, even if the employee did not have permission to act in this way. In the Northern Territory, the vicarious liability of the employer is codified in both common law and legislation, such as the Racial Discrimination Act 1976 and the Sex Discrimination Act 1984. These laws state that an employer is subject to the law as if “[the employer] has also done the act”. This liability may extend to actions committed at employment-related events such as work social functions, training sessions and business trips. It can even extend to employee behaviour conducted online using company technology. For instance, if an employee uses a company computer to send threatening emails, the company may be liable for the resulting damages, even if the employee was doing this without the consent of the company.
An employer can defend a claim of vicarious liability by proving that it was not negligent, or that the employee was acting on their own behalf, outside their employer’s instructions. One test for vicarious liability is the connection between the wrongful act and the nature of the employment. Under common law, an employer can recover damages from the employee or be fully indemnified if the employer was not negligent.
However, it is a high bar for an employer to prove that they have no liability for the action of their employees. For instance, an employer has a legal responsibility to take “all reasonable steps” to prevent harassment and discrimination from occurring in their business. This responsibility applies to both interactions with the public and staff members. The meaning of “all reasonable steps” is determined on a case-by-case basis. It might include steps such as establishing new workplace policies and training to address harassment and discrimination or implementing an internal complaints process.
When taking preventative measures, an employer should consider the size and organisational structure of the workplace, the nature of the work, the demographics of employees and their industrial awards and agreements. The employer should particularly consider wrongful acts previously committed by employees when deciding on new policies and procedures.
Contractor vs employees
It is essential for a worker to understand their status as either contractor or employee. The status of a worker depends on their contract and work arrangements. Employers have vicarious liability for their employees’ behaviour because they are a part of the business. By contrast, a contractor legally works for themselves and therefore carries their own legal liability.
Vicarious liability for criminal act
It has been a matter of some debate whether an employer can be held liable for the criminal actions of its employees. In New South Wales v Lepore & Anor(2003), the High Court held that the Church could not be held vicariously liable for a priest’s sexual abuse of a minor because the assault had not happened in the normal course of employment. However, the High Court later found in Prince Alfred College Incorporated v ADC (2016) that just because an employee’s act is criminal does not absolve the employer of vicarious liability. The employer may still be vicariously liable if the employment provides the opportunity for the commission of the offence.
The Northern Territory Anti-Discrimination Tribunal recently held that a company was vicariously liable for racial discrimination perpetrated by two employees. A general manager at Centreprise was found to have said that Indigenous people relied heavily on handouts and cheated the system. He talked about the difference between “Westernised” Indigenous people and “traditional people out bush” and referred to an Indigenous rap song playing on the radio as “f**king black people shit”. While this last comment was made on a lunch break outside the office, the conduct was found to be connected to work. A technical assistant within the company also made comments that she admitted could be seen as offensive and disrespectful to Indigenous people. However, she defended her statements by claiming that they were not racially motivated.
The Tribunal found that the behaviour of the employees was unlawful because it discriminated against Indigenous workers. The Tribunal ordered the general manager to pay damages of $8,000 and the assistant $4,000. The Commissioner found that the company was also at fault because it failed to communicate anti-discrimination policies effectively and gave no advice on remedial action when there was a breach of the policy. The Tribunal ordered that the employer pay 25% of the employee’s fines because of its own vicarious liability. The company was warned that it was not enough to have anti-discrimination policies; these policies must also be “communicated effectively”.
Discrimination in the workplace is legally permitted in limited circumstances. For instance, an employer can introduce special measures to help staff overcome disadvantages and complete their work on an equal basis. In this way, special measures can target people on the basis of a special attribute such as sex, race and age. For example, a builder in an area with high Indigenous unemployment can advertise that the position is only available to Indigenous people. This is lawful discrimination because it is intended to benefit a group that is at a disadvantage in relation to work in the relevant area.