Injury & Compensation

Employers can be vicariously liable!

by Judith Wong
Senior Associate, The Employment Law Group,
Allen & Overy

Article exclusively contributed by
Allen & Overy

In certain circumstances, employers are liable when their employees are negligent or at fault, under a concept known as "vicarious liability". For example, if a lift operator closes a lift door too quickly and injures a passenger as a result, the employer is liable to pay damages to the passenger. This is because the passenger may otherwise find it difficult to get compensation from the employee, who may have very limited financial resources.

Employers are, however, only responsible for negligence and faults committed by their employees in the course of their employment. An employee's action is treated as having been carried out "in the course of employment" if it is either:

(i) authorised by the employer (this includes when an authorised act is carried out in an unauthorised manner); or
(ii) despite not being authorised, so closely connected to his or her employment that it is fair for the employer to be liable.

The following is a recent case considered by the Court of Final Appeal, which examined the principle of vicarious liability.

Ming An Insurance Co (HK) Ltd vs Ritz-Carlton Ltd. (2003)

On the evening of 9 March 1998, a doorman employed by Ritz Carlton seriously injured two pedestrians when he lost control of the limousine he was driving along Queensway. From time to time, the hotel required the doorman to move the limousine when the driver was off duty - for example, if there was not enough parking space and the limousine was obstructing other cars. This sometimes meant that the doorman had to drive the limousine along Queensway. The hotel staff also developed the practice of buying food elsewhere and sometimes persuaded the limousine driver to give them a lift.

On the night of the accident, a bellboy went out to collect some take-away food and, as the driver was off duty, the limousine was driven by the doorman. This was considered by the courts to be an unauthorised purpose. Although the Lower Courts had previously decided that the hotel was not liable for the doorman's negligence because, in driving the limousine to collect food, the doorman had been acting outside his employment duties, the case went to the Court of Final Appeal.

The Court of Final Appeal found that the practice of collecting food from outside was also a purpose of the hotel itself, because it was obviously also in the hotel's interest that its staff were adequately fed. The doorman was employed to move the limousine on public roads when necessary. This necessarily was of some risk to other road users and, as such, the close link between the doorman's employment and his reckless driving, which caused the accident, clearly existed. The practice of using the limousine to collect take-away food had been known to the hotel all along and not disapproved of. The hotel was therefore vicariously liable.

Q&A on vicarious liability
Q1 Does vicarious liability cover acts committed by an employee outside Hong Kong?
A1 Yes, as long as the test of vicarious liability is satisfied (as set out above), it does not matter where the acts were committed.

Q2 Is the employee liable to pay any of the damages to the victim if the employer is already held to be vicariously liable? If so, how is the liability split between the employer and the employee?
A2 An employee is liable to pay damages to his employer for being negligent during the course of his employment. As a result, an employer can seek reimbursement from an employee after compensating the victim. If the employer is partly to blame for the action causing the damages (in the example of the lift operator, if the accident occurred as a combined result of the operator's negligence and the lift breaking down), the employer may be held to be contributing to the accident. It will then be up to the court to decide how much of the accident was a result of the employee's negligence and how much of the accident was a result of the lift breaking down, and to split the liability between the employer and the employee accordingly.

Q3 Is an employer also vicariously liable if its independent contractors (as opposed to its employees) are negligent or at fault?
A3 The general rule is that an employer is only vicariously liable for the negligence and fault of its employees and not its independent contractors.

Taken from Career Times 07 November 2003

(Last review date: 23 August 2013)

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Disclaimer: The opinions expressed in this article are those of the contributor.

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