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Are employers responsible for damage caused by employees?
Thu, 11 Aug 2011 10:55
Where employees cause damage to property or persons their employer can be held liable by the victim. This is called the principle of vicarious liability and can result in the employer being sued for damages. An employer can be found by the courts to be vicariously liable for the actions of its employees where the victim is able to show that the damage was caused by the employees in the course of their employment duties. This applies whether the employees caused the damage intentionally or negligently.
Vicarious liability applies even if the employees were not actually engaging in work duties at the time the damage was caused. They need only to have caused the damage during their working hours. For example, in the case of African Guarantee and indemnity Co. Limited vs Minister of Justice (Contemporary Labour law Volume 12 No. 2 page 18) the Court found that some police officers, driving a police car were engaged in a race with another car when they caused an accident. Although the accident was caused while the officers were not busy carrying out their police duties the Court still found that the employer was vicariously liable for the damage caused by the policemen.
The principle of vicarious liability is not limited to cases involving damage to property or to motor accidents. It could also apply in cases of fraud, defamation, financial losses, theft, sexual harassment, or injury to persons. For example, in the case of K vs Minister of Safety and Security K was given a lift by three on-duty policemen in an official police vehicle one night.
The three policemen who were in uniform raped K who then sued the Minister of Safety and Security in the High Court. Both the High Court and the Supreme Court of Appeal found that the Minister was not vicariously liable. However, the Constitutional Court overturned this decision because the victim was illegally given a lift by the police and because the policemen failed to perform their duty to protect the victim.
In the matter of Hirsch Appliance Specialists vs Shield Security Natal (Pty) Ltd security guards stole items from Hirsch Appliances while supposedly guarding its premises. The security company was found to be vicariously liable for the victim’s losses. This was despite the fact that the employer had not in any way been complicit in the theft.
The employer cannot avoid liability simply because it was not involved in the transgression or did not know it was happening. This is because the employer has the duty to employ responsible, capable employees and to exercise proper control over them. This is a very tough duty imposed on employers.
It does not always have to be the employer’s own employee who caused the damage. That is, if an employee of employer A is under the control of employer B when the damage is caused, then employer B could be vicariously liable for the damage caused.
This occurred in the case of Midway Two Engineering and Construction Services Bpk vs Transnet Bpk (Contemporary Labour law Volume 12 No. 2 page 14). In that case a Midway employee, while driving a truck on Transnet property, caused damage to another person’s vehicle. Despite the fact that the driver was not a Transnet employee the Court found that Transnet was liable because it had the control of the employee at the time the damage was caused.
Due to the extremely onerous responsibility of employers for the actions of their employees employers are advised to:
- obtain insurance cover against vicarious liability.
- insert protective clauses in employment contracts
- exert careful control of all employees who might come in contact with third parties in the course of their duties or during working hours
- ensure that their rules are comprehensively codified and thoroughly communicated to all employees
- ensure that all employees are properly trained in the employer’s rules and in their duties and have the necessary licences and qualifications for the job
- discipline employees who break the rules
- make sure that managers know that they are responsible for overseeing compliance with the rules.
The above precautions are in any case necessary regardless of the issue of vicarious liability. All employers need, on a regular basis to have their policies, rules, employee qualifications, rule communication systems and performance appraisal procedures audited. This will not only reduce the risk of vicarious liability buy will also optimise employee compliance with the employer’s internal standards of work performance, safety and conduct.
Where employers do not have the resources on board to conduct such regular audits they cannot use this as an excuse for failing in their duty. The cost of using external experts will be far lower than the cost of law suits, payment of damages, lost customers, materials wastage and rework.
By lvan lsraelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or via e-mail address: firstname.lastname@example.org. Go to: www.labourlawadvice.co.za. This article first appeared in The Star.