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Vicarious Liability: Re-Examining the "Akin to Employment" Test

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About The Author

Peter Lennon (Joint Editor-in-Chief )

Peter Lennon recently completed the LPC at the University of Sheffield, and is a future trainee of Mills & Reeve LLP. Before law, Peter studied History at Selwyn College, Cambridge. His main areas of interest are corporate law, administrative law, and legal policy. Outside the law, Peter enjoys writing, cooking, and pretending to know about football.

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Vicarious liability is a common law doctrine which allows an employer to be held liable for the torts of their employee. The key tension at the heart of vicarious liability is between justice for claimants, who may be unable to obtain appropriate compensation from a tortfeasor who is an ordinary member of the public, and fairness to employers, who can be held liable for actions they did not commit or even authorise.

The modern test of vicarious liability consists of two steps. For a party to be held vicariously liable for a tort there must be:

  1. An employer-employee relationship between that party and the tortfeasor
  2. A sufficiently close connection between that employment and the tort committed

The law in this area has been “on the move” for some time, with several 21st century cases pushing the boundaries of vicarious liability further and further from their initial position. Two recent Supreme Court cases, Barclays Bank plc v Various Claimants [2020] UKSC 13 and WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12, have affirmed previous case law while also acting to halt the further expansion of vicarious liability. Barclays Bank addresses the first step of vicarious liability and restates some of the traditional boundaries of who is and is not an “employee”. WM Morrison Supermarkets clarifies recent case law on the second step, and how courts are to assess the “sufficiently close connection”.

Part 1 of this series will deal with the first step and Barclays Bank, while Part 2 will cover WM Morrison Supermarkets and its commentary on the second step.

The Facts of Barclays Bank

The facts of Barclays Bank concern a series of alleged sexual assaults between 1968 and 1984 by the late Dr Gordon Bates. Dr Bates was an independent medical practitioner who conducted medical assessments and examinations on prospective employees for Barclays Bank, who paid him a fee for each assessment but did not employ him.

In a group action, 126 separate claimants allege that Dr Bates sexually assaulted them during these examinations, which took place in a consulting room in his home. The claimants argued that Barclays was vicariously liable for the assaults, in part because Dr Bates died in 2009 and his estate has been distributed – without vicarious liability, the claimants are unlikely to recover any compensation at all.

At first instance, Nicola Davies J held that Barclays was indeed vicariously liable for Dr Bates’ actions, and this was upheld by the Court of Appeal in Barclays Bank plc v Various Claimants [2018] EWCA Civ 1670. That decision was covered – and roundly criticised – by Ming Lu Ang for Keep Calm Talk Law back in 2019, and her article provides a much fuller critique of the Court of Appeal’s reasoning.

Barclays subsequently appealed to the Supreme Court, resulting in this most recent decision. Barclays’ position is simple: English law has always held that an employer will not be vicariously liable for the actions of an independent contractor. The various claimants argued that a series of recent cases have destroyed this old proposition and created a range of situations where it may be fair, just, and reasonable for an employer to be held so liable. In particular, the claimants focused on Barclays' ability to properly compensate them (where Dr Bates could not) being justification to apply vicarious liability.

Case Law “On The Move”

Lady Hale’s judgment in Barclays Bank focused heavily on the recent case law, outlining how vicarious liability has expanded step by step. Samuel Cuthbert discussed several of these cases in more detail for Keep Calm Talk Law back in 2016 – this piece will deal with them briefly to outline the chain of precedents leading to the present situation, and highlight some further developments since that piece was written.

Lady Hale began by acknowledging the case of Lister v Hesley Hall Ltd [2002] 1 AC 215, which dealt with sexual abuse by the warden of a boarding school. This case was primarily concerned with the second step of vicarious liability (the connection between employment and tort) and will pop up again in Part 2 of this article. However, Lady Hale argues that Lister is significant here as well, as it signalled the court’s willingness to expand on traditional definitions and consider policy justifications for vicarious liability.

Also significant is the Canadian Supreme Court decision in Bazley v Curry [1999] 2 SCR 534, which argued that where a clear precedent on vicarious liability did not exist (ie. in grey areas such as Lister), policy factors such as the ability to compensate a claimant could be used to guide the court’s decision. Bazley is arguably the origin of this line of jurisprudence in the UK, and the merits of the Canadian Supreme Court’s decision were hotly debated in Lister.

E’s Case (2012)

JGE v Trustees of the Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 938, otherwise known as E’s case, was a preliminary issue in the Court of Appeal considering whether the relationship between a priest and his diocese could incur vicarious liability, as the priest was neither a true employee nor an independent contractor.

Ward LJ did acknowledge the decision in Bazley, and conceded that an understanding of the policy reasons for vicarious liability was necessary to understand the development of the law, but ultimately rejected those policy reasons as justification in and of themselves for vicarious liability. Instead he considered the nature of the two roles, and summarised them as such:

“an employee is one who is paid a wage or salary to work under some, if only slight, control of his employer in his employer’s business for his employer’s business. The independent contractor works in and for his own business at his risk of profit or loss.”

E’s case is the origin of the “akin to employment” test in English law: where a person is not strictly an employee or independent, which are they closer to? Ward LJ pays particularly close attention to the employer's level of control over the employee, and the integration of the employee's activity into the employer's. In E’s case it was determined that the relationship between a priest and a bishop was closer to an employee than an independent contractor – the relationship was “sufficiently akin to employment”, and therefore vicarious liability could apply.

Christian Brothers (2012)

Various Claimants v Catholic Child Welfare Society [2012] UKSC 56, also known as the Christian Brothers case, dealt with physical and sexual abuse in a Catholic residential school. At issue was whether the Institute of Christian Brothers, of which several of the accused teachers were members but not employees, could be vicariously liable along with the owners of the school.

As part of his judgment (para 35), Lord Phillips famously outlined five justifications for imposing vicarious liability on an employer:

“(i) the employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;

(ii) the tort will have been committed as a result of activity being taken by the employee on behalf of the employer;

(iii) the employee’s activity is likely to be part of the business activity of the employer;

(iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee;

(v) the employee will, to a greater or lesser degree, have been under the control of the employer.”

Later in the judgment (para 47) Lord Phillips continued:

“I have identified those incidents of the relationship between employer and employee that make it fair, just and reasonable to impose vicarious liability on a defendant. Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is ‘akin to that between an employer and an employee’. That was the approach adopted by the Court of Appeal in E’s case”

These paragraphs are responsible for much of the confusion in subsequent cases on vicarious liability. While Lord Phillips himself later applied the test from E’s case, his statements do appear to create a new test for expanding liability, based on his “five incidents”. The Court of Appeal in Barclays Bank relied heavily on Lord Phillips’ five points, particularly the ability to compensate, arguing that because Dr Bates was deceased and the claimants could not extract compensation from him, it was fair, just and reasonable to expand liability to Barclays.

Cox v Ministry of Justice (2016)

Cox v Ministry of Justice [2016] UKSC 10 considered the case of a prison catering manager who was injured by the negligence of a prisoner working in the prison kitchens. Applying Christian Brothers, Lord Reed found that while the prisoner did not have a contract of employment, his work – undertaken at the direction and for the benefit of the prison – was sufficiently “akin to employment” to incur vicarious liability. The Cox decision is mostly significant for the fact that it extended the Christian Brothers precedent to a case not involving historic sexual offences, which had previously been seen as something of a special case given the vulnerability of the victims and the exceptional need for compensation.

Armes v Nottinghamshire County Council (2017)

Armes v Nottinghamshire County Council [2017] UKSC 60 considered whether the County Council could be held vicariously liable for the abuse of a child by the foster parents the council placed her with. Lord Reed again applied Christian Brothers, and discussed Lord Phillips’ five points at length, before finding that the council could indeed be held vicariously liable for the actions of the foster parents.

Armes is the most controversial of these decisions, and was criticised by James Smith in his article for Keep Calm Talk Law in 2018, as it expands the “akin to employment” test to a relationship that is superficially very far from that of an employer and their employee. It also further muddies the waters between vicarious liability and non-delegable duty liability, which was also at issue in Armes and was arguably much more appropriate to the facts of the ca

The Supreme Court’s Judgment in Barclays Bank

As is often the case, the Supreme Court in Barclays Bank was reluctant to criticise its previous decisions outright. Instead, Lady Hale argued that there was a through-line in these cases consistent with the test set out by Ward LJ in E’s case, and the traditional division between employees and independent contractors. Her judgment is almost entirely concerned with clarifying previous case law, rather than dealing with the facts of Barclays Bank itself.

In relation to Lord Phillips’ five points from Christian Brothers, Lady Hale pointed out that Lord Phillips himself did not use those policy reasons to justify applying vicarious liability in that case. He focused instead on the details of the relationship and its closeness to employment, as Ward LJ did in E’s case. Because of this, Lady Hale argues, Lord Phillips was not stating that his “five incidents” were the criteria for extending vicarious liability but was merely discussing the justifications for it.

Lady Hale also points out that in Woodland v Swimming Teachers Association [2013] UKSC 66, decided after Christian Brothers, Lord Sumption (at para 3) referred to that case as applying the “sufficiently analogous to employment” test rather than Phillips’ five points. She argues it is wrong to confuse Phillips’ points, which discussed the policy reasons justifying vicarious liability, with a set of principles or tests for determining whether a relationship is “sufficiently akin to employment”. This is exactly what happened in Armes, where the court used Phillips’ fourth and fifth points (creation of risk and level of control) to justify finding the foster parents “sufficiently akin” to employees.

Lady Hale is effectively arguing that in Lord Phillips' statement in Christian Brothers, particular emphasis should be on the use of the word can instead of the word will:

Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is ‘akin to that between an employer and an employee’.

This is a vital clarification. Where some commentators (and judges) took this to mean that the five "incidents" will themselves mean a relationship is "akin to employment", the Supreme Court is now saying that where a relationship is already "akin to employment", the five incidents are what justify extending vicarious liability to that relationship. The "akin to employment" test itself is much more in line with Ward LJ's reasoning in E's case: which is it closer to, based on the characteristics of the relationship? 

Despite Lord Reed paying heavy attention to the five points in Cox, Lady Hale argues that that case would have been decided similarly however the test was phrased, and it is difficult to disagree that a prison labourer working for prison wages is not “sufficiently akin” to an employee. On Armes, however, Lady Hale demurs. While she refers to the case as the “most difficult” of the four, she declines to comment on whether Armes correctly applies the akin to employment test or misuses Lord Phillips’ statements, instead focusing on whether Armes has anything to say about independent contractors.

On that point, Lady Hale’s judgment correctly points out that while these four cases have significantly expanded the first step of vicarious liability, none of them have cast doubt on the old proposition that an employer is not liable for an independent contractor. In fact, several of the judgments directly restate the point. Lord Sumption in Woodside, shortly after citing Christian Brothers, reaffirms that:

“[Vicarious liability] has never extended to the negligence of those who are truly independent contractors, such as Mrs Stopford appears to have been in this case.”

Likewise, Lord Reed in Cox stated that vicarious liability could extend to an individual (emphasis added):

“…who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party)”

Even the Armes decision, flawed as it may have been, justified imposing vicarious liability by noting that the foster parents “cannot be regarded as carrying on an independent business of their own”, implying that if they were carrying on such a business, vicarious liability could not apply.

There is simply no basis to say that recent developments in vicarious liability, however major, have undermined the classic distinction between employees and contractors. This was stated by Singh LJ in the Court of Appeal in Kafagi v JBW Group Ltd [2018] EWCA Civ 1157 and re-iterated by Lady Hale in Barclays Bank. The Supreme Court therefore unanimously overturned the Court of Appeal’s decision in this case and found that Barclays was not vicariously liable for the actions of Dr Bates, who was in every sense carrying on his own independent business.

In an interesting obiter comment (para 29), Lady Hale considered the need for vicarious liability to account for torts committed by workers in the gig economy (an issue discussed by Keir Baker back in 2016). She noted that employment law has developed two different definitions of “worker”: employees, and those who are effectively employees. However, she resisted the “tidiness” of aligning vicarious liability’s “akin to employment” status with this statutory definition.

Conclusion

The Supreme Court’s judgment in Barclays Bank is a masterclass in treading carefully. It reaffirms the recent development of vicarious liability and the “sufficiently akin to employment” test, but attempts to trim some of the rough edges away without outright criticising past decisions. It does this by focusing more on E’s case than Christian Brothers, clarifying that Lord Phillips’ five points do not themselves make a relationship "akin to employment", and reaffirming the traditional boundaries relating to independent contractors.

This is unlikely to please the more vocal critics on the issue, and the judgment in Barclays Bank fails to directly address some of the grey areas in vicarious liability following Armes, or criticise those decisions outright. However, the Supreme Court’s judgment in this case (as well as in WM Morrison Supermarkets) does attempt to clarify a confusing area of case law, and provides a little more confirmation on where vicarious liability will stretch to – as well as where it will not.

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Tagged: Employment Law, Sexual Offences, Supreme Court, Tort Law

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