We’ve talked previously on this blog of the importance of using lawyers and legal advice in a practical and educational way and last week’s Supreme Court decision emphasises why this is so important.
The case circumstances were well and widely reported – for a useful summary we suggest reading this.
Vicarious liability for actions of employees
Suffice it to say that many employers and business clients aren’t very familiar with the concept of vicarious liability and it seems unfair. In basic terms, as employer, you can be liable for actions of your employees which you didn’t authorise or countenance.
Aside from examples such as where an employee fights with another employee or even a customer or supplier at work, vicarious liability opens up myriad other risks. These risks are additional to other types of legal risk such as where an employee can, in contract law terms, bind you, as employer, where you didn’t give the employee authority to do so.
Other new areas where risk has been amplified hugely in recent years relates to online communications by members of your staff or disclosure of client or customer data.
There is no magic risk removal tool – every business faces legal risk, but to reduce the risk considerably, education is key. It isn’t sufficient for the owners or senior management or employees alone to have dealings with lawyers or to simply use lawyers when the proverbial hits the fan or where you need a contract. It’s imperative that your whole team are educated and regularly reminded of legal risks and their responsibilities.
Vicarious liability is also problematic for employers because, given the choice between pursuing an individual through the courts, with the inherent uncertainty that the individual either can’t or won’t actually pay any judgment, as opposed to suing an employer, with better prospects, which would you choose?
One way employers can address this issue, in addition to the obvious route of dismissing the employee for any gross misconduct, is to have a clear policy that they will pursue the employee legally for any losses incurred, regardless of ability to pay – we talked about this some time ago in a popular post about whether more employers should sue employees.
For advice on legal risks or for information about how we can assist your business by educating your staff and working with you on a more holistic, ongoing basis, please do get in touch.
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