What Does ‘Vicarious Liability’ Mean for a Small Business?

Vicarious liability can make an employer legally responsible for wrongdoing by an employee that is sufficiently connected with their work.

Lowdown

The employee who caused the harm may also be personally responsible, but in some circumstances a claim can be brought against the employer as well.^[1]

Why It Matters

An employer does not have to have personally carried out or authorised the wrongful act. What matters is whether the wrongdoing is sufficiently connected with the employee's work.^[1]

Independent contractors are generally treated differently. However, simply calling someone a freelancer or contractor does not determine the legal position. The actual working relationship matters, and employment status and vicarious liability are separate legal questions.^[1][2]

If you employ staff, employers' liability insurance is compulsory in most cases. It covers certain claims relating to employee injury or illness arising from employment, rather than every type of wrongdoing for which a business might be responsible.^[3]

Our Conclusion

A business can sometimes be responsible for wrongdoing by an employee connected with their work. Keep roles, supervision and insurance arrangements clear, and do not rely on job labels alone.

Sources

[1] Health and Safety Executive, Civil law: Compensation claims in the workplace and Charity Commission, Vicarious liability of a charity or its trustees

[2] GOV.UK, Employment status and employment rights: Guidance for HR professionals, legal professionals and other groups

[3] Health and Safety Executive, Employers' Liability (Compulsory Insurance) Act 1969: A brief guide for employers