Jacquie Seemann and Catherine Rosero

When is an employer liable for the criminal acts of its employees?

Jacquie Seemann and Catherine Rosero

17 May 2017

Employment Contracts Employment Disputes

Guidance from the High Court on vicarious liability means your employment contracts, position descriptions and delegations need to clearly define an employee’s approved areas of responsibility.

Because of the concept of ‘vicarious liability’, an employer who or which has done nothing wrong can be responsible for the wrongful actions of an employee.

The critical question is whether the employee’s wrongful act was committed ‘in the course of employment’. This can be a complex inquiry; and conduct might be ‘in the course of employment’ even if the conduct is criminal.

At first blush, this proposition might seem unfair – for example, what if a rogue employee has independently committed a criminal offence which the well-meaning employer neither encouraged nor condoned? An example might include the sexual abuse of a pupil by an employed teacher. The policy considerations behind the law include who should pay for the injury and loss suffered by a victim of the perpetrator who has no money: the innocent victim, or the employer that has created the circumstances in which the crime was committed?

These were the issues the High Court had to consider in Prince Alfred College Incorporated v ADC [2016] HCA 37 (5 October 2016).

The plaintiff’s claim

In 1962, the plaintiff, then aged 12, was a boarder at Prince Alfred College (College). The plaintiff was sexually abused on a number of occasions by a boarding housemaster employed by the College.

In proceedings against the College in the Supreme Court of South Australia, the plaintiff alleged that the College was liable for personal injury he had suffered either because it:

  1. had neglected and breached its duty of care to him; or
  2. had breached a non-delegable duty of care to him; or
  3. was vicariously liable for the criminal conduct of the housemaster.

However, since the claim was so old, in order to be successful in any of these causes of action the plaintiff first required an extension of the limitation period in which to commence his action. Ultimately, he failed on this issue, as the Court considered it was no longer possible for there to be a fair trial given the extraordinary delay in commencing proceedings.

Vicarious liability – ‘the relevant approach’

Despite refusing to grant an extension of the limitation period, the High Court nevertheless took the opportunity to provide some guidance as to when an employer might be vicariously liable for the deliberate wrongful act of its employee.

According to the majority of the Court, the ‘relevant approach’ in Australia is:

‘… to consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. In determining whether the apparent performance of such a role may be said to give the “occasion” for the wrongful act, particular features may be taken into account. They include authority, power, trust, control and the ability to achieve intimacy with the victim. The latter feature may be especially important. Where, in such circumstances, the employee takes advantage of his or her position with respect to the victim, that may suffice to determine that the wrongful act should be regarded as committed in the course or scope of employment and as such render the employer vicariously liable.’

In the factual circumstances of this case, the Court said that the primary judge was unable to determine the nature of the housemaster’s role given the passage of time; most of the evidence necessary to determine the issue had been lost.

How to minimise risk of liability

It follows that an employee’s contract, as well as the employer’s policies and how these operate in practice, will be closely scrutinised by courts when considering what conduct would be considered to be ‘in the course of employment’.

Minimising risk is a challenge, but there are a number of things an employer can do, including:

  • ensuring position descriptions and employment contracts clearly define the employee’s approved areas of responsibility; and
  • ensuring authorities and delegations are kept up-to-date and involve only those employees necessary.

 

To learn more in this area and how your organisation can minimise risk of liability, Thomson Geer will host a seminar providing an update on vicarious liability on 23 May 2017 – click here for further details.