Vicarious Liability is a type of strict liability where a person is held to be responsible for torts committed by someone else even though he himself is not at fault. At its early stage in the early English Law, vicarious liability used to hold a master responsible for all of his servant's wrongs. The master's liability could be justified by reference to the Latin maxim "qui facit per alium facit per se"1. Due to the increasing hazards arising from the modern industry and the assumption that a master could exercise a closer control over his servants necessitated a wider range of responsibility. By the early 19th century2, the basis of the modern principle was finally laid down holding an employer liable for all torts committed by the servant "in the course of employment".
In Imperial Industries Ltd v Shatwell3 Lord Pearce pointed out that the doctrine is based on "social convenience and rough justice". It is considered by the courts that this modern principle is represents a compromise between two conflicting policies which this essay will be concentrated on. On one hand, is the social interest in furnishing an innocent tort victim with recourse against a financially responsible defendant; and on the other, is the hesitation to foist any undue burden on business enterprise.
Starting from the first policy argument regarding the needs of tort for compensation, it can be seen that the doctrine of vicarious liability goes against the moral objective of tort. The law of Tort is based on the idea that the wrongdoer must be held liable for his torts and not anyone else. This doctrine makes employers liable for torts that they themselves have not committed. It should be noted though, that in a justice society, innocent victims need to be compensated and that the law of tort is there to ensure this. "Although most torts are committed by individuals, almost all damages are paid by companies, usually employers or insurers: individuals are rarely worth suing". On social and policy grounds, it is not necessarily a bad thing that the onus of liability rests in practice on the employer.
In Hutchinson's case6 for example, Alderson B put forward the justification that the employer is in a better position with the "deepest pocket" to cover the costs. An employer is a much more attractive defendant since he is more likely to have the resources to meet an award of damages. If liability was passed on the negligent workman, it would crush him and his family financially, as the original injury was to the victim. Moreover, the structure of the economic and business practices puts an employer in a better financial position than the employee to absorb and distribute these costs. Another argument is that since the employer is the one making the profit of his employee's activities, it is only fair that he bears any losses that those activities cause.
A more convincing justification is the one that places the function of vicarious liability as a fair loss distribution mechanism in the economy. An employer can easily distribute such losses over product prices and wages than an employee. Additionally, there is a more general claim that tort liability not only contributes in compensating the victim but also contributes to accident prevention in general. Vicarious liability gives the employer a financial interest in encouraging his employees to take care for the safety of others; employing a more competent staff; provide more adequate materials and a safer place of work, and as a result business run smoothly.
But the law took into consideration the need of business to be free to operate without excessive burdens and imposed some requirements for the claimant to satisfy before claiming for vicarious liability. Firstly, the claimant must prove to the court that the person who caused him damage was the defendant's employee and not an independent contractor. This distinction is crucial since an employer will be liable for torts of his employees but usually not for torts of independent contractors. 7 The courts came up with a number of tests to distinguish between the two.
The intention of the parties to the type of the relationship they want to create, the degree of control exercised by the employer and the degree of integration of the defendant within the business and the allocation of financial risk are all relevant factors to be examined by the courts in order to decide whether the defendant was an employee or an independent contractor. In Ferguson v Dawson Partners (Contractors ) Ltd8, for example, even though the building worker was expressed to be a "labour only subcontractor", was held by the court to be an employee because he was treated as an employee and the label was put for tax and national insurance purposes.