Employment Law Update: When is an employer liable for the criminal acts of its employees?
Employers are often held liable for the conduct of their employees, under the doctrine of vicarious liability. This is due to the fact that employers are often seen as directing the behaviour of their employees and accordingly must share in the good and bad results of that behaviour. According to landmark court decision NSW v Lepore, the application of this doctrine is limited to actions committed by employees “within the scope of their employment”.
Recently, the High Court gave an employment law update, confirming that, in certain cases, employers will be vicariously liable for intentional criminal acts committed by employees. This is true even if the employer has no intention to cause harm and played no physical role in the harm.
Case Study: Prince Alfred College Incorporated v ADC  HCA 37
In 1962, the plaintiff, then aged 12, was a boarder at Prince Alfred College. The plaintiff alleged that he was sexually abused on multiple occasions by a boarding housemaster employed by the College. The plaintiff claimed that the College was liable for personal injury he had suffered for numerous reasons, including that:
- The College had neglected and breached its duty of care; or
- The College had breached a non-delegable duty of care; or
- The College was vicariously liable for criminal conduct of the housemaster.
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. He failed on this issue, as the court considered it was no longer possible for there to be a fair trial given the long delay in commencing proceedings.
Despite this, the High Court provided some guidance as to the circumstances when an employer might be vicariously liable for intentional criminal acts committed by their employees. The majority held that an employer could be vicariously liable in certain circumstances which may be determined by looking at the employee’s role and the nature of their responsibilities. This involves considering the special role that the employee was assigned, and the employee’s special position in relation to the victim. Factors that are relevant may include authority, power, trust, control and the ability to achieve intimacy with the victim.
In this case, the High Court said that the primary judge was unable to determine the nature of the housemaster’s role given the duration of time that had passed, as most of the evidence necessary to determine the issue had been lost.
Impact on Employment Law
This decision is a warning for operators of aged care facilities, boarding schools and hospitals whose employees provide care for vulnerable people. Employers in these areas should consider whether their employment contracts, company policies, position descriptions and performance reviews are sufficiently detailed to accurately describe an employee’s role and the employer’s expectations to avoid a finding of vicarious liability for criminal conduct.
Checklist for employers:
- Implement a clear statement of authorised and unauthorised conduct within the company policy, which should form part of the contract of employment;
- Consider implementing pre-employment criminal reference checks in workplaces where the employee’s role involves a “great deal of trust and confidence”; and
- Reviewing or implementing appropriate insurance cover and ensuring that the cover includes the sort of conduct that employees may commit.
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