· Features

Liability for contractors’ wrongdoing

The CoA recently upheld a High Court decision that Barclays was vicariously liable for sexual assaults made by a doctor working as an independent contractor

Complaints have been raised by 126 former employees relating to examinations that took place between 1968-1984.

The general rule is that no liability arises for the negligence or other torts committed by an independent contractor in the execution of the work for which they were engaged, and the The Court of Appeal's (CoA) decision is therefore one that could have far-reaching implications for businesses.

Establishing vicarious liability

Vicarious liability normally arises where the following test is satisfied:

  • The wrongdoer is an employee of the defendant or in a relationship 'akin to employment'; and
  • The tort committed is sufficiently closely connected with the position in which s/he was employed.

The High Court weighed up whether it was 'fair, just and reasonable' to impose vicarious liability, and concluded that Bates was in a relationship akin to employment with Barclays. Furthermore, it held that the sexual assaults were sufficiently closely connected with Bates’ work.

Barclays appealed to the CoA, arguing that the relevant relationship was not one of employment or 'akin to employment', and that Bates’ status as an independent contractor was a complete defence to the claim. However, the CoA agreed with the High Court’s approach, and noted the following in relation to five key factors to be taken into account:

  • Barclays as the employer had greater means to satisfy the claims than the estate of Bates, which had been distributed a long time ago (he died in 2009);
  • It was 'clear beyond doubt' that Bates was acting on Barclay’s behalf, and the bank received the principal benefit of the medical assessment;
  • The process was a part of Barclay’s business activities, the purpose being to assess whether, health-wise, the individuals would be effective members of the workforce;
  • Recruits were required to be examined by Bates (they had no choice in the matter) and Barclays therefore created the risk of the tort being committed;
  • Barclays had sufficient control over what Bates was required to do. This was held to be the case despite the fact that he carried out the examinations at his home-based treatment room, organised his own diary and carried out other medical treatments.

Lessons learned

The CoA’s judgment clearly extends the scope of vicarious liability beyond most expectations, and therefore businesses will undoubtedly be looking for further legal certainty, particularly in light of the prevalence of independent contractors in today’s gig economy.

Although it is likely to be of little reassurance, such decisions will be reached based on the specific facts of the particular case. Businesses should take note of the principles applied in this judgment and be aware of the liability they might face when engaging external practitioners, despite their independent contractor status.

A sensible approach for employers to take in order to avoid vicarious liability is to ensure that they have taken all reasonable steps to prevent such acts or omissions from occurring e.g. by implementing and monitoring compliance relevant policies (such as an equal opportunities policy). Employers should also consider which of their policies should apply to non-employees, ensure that all staff and contractors (irrespective of status) receive adequate supervision during their engagement, and undertake regular risk assessments, ensuring that appropriate measures are in place to minimise any possible risks.

Keely Rushmore is partner in the employment department at SA Law