Vicarious liability 261
Limited liability
Employers are vicariously liable for torts committed by their employees during the
course of their employment. For example, if a lorry driver, while employed by a company,
negligently caused a crash which injured another motorist, the company would be liable to
the other motorist in the tort of negligence. The lorry driver would also be personally liable
but the injured motorist would generally prefer to sue the employer as the employer is
more likely to be able to pay damages and should be insured. Although this example is
straightforward, this is not always the case. It can be difficult to decide whether a worker
is an employee or an independent contractor. If a worker is an independent contractor,
the person using his services will not be vicariously liable for his torts. It can also be difficult
to decide exactly when an employee was acting in the course of his or her employment.
contractors Employees contrasted with independent
Employees are said to work under a contract of service whereas independent contractors
work under a contract for services. A person who works for another may do so either as an
employee or as an independent contractor. For example, an hourly-paid bricklayer working
full-time for a local authority will be an employee, whereas a bricklayer building a wall in
my garden for £500 will be an independent contractor. Sometimes, as in this example, the
distinction is obvious. However, in many cases it can be very difficult to say whether a
worker is an employee or an independent contractor.
The Employment Rights Act 1996 s. 230(1) says that an employee works under a contract
of employment. Section 230(2) states that a contract of employment, for the purposes of
ERA 1996: ‘means a contract of service or apprenticeship whether express or implied, and
whether oral or in writing’. This definition has two problems for our purposes. First, the
definition applies only for the purposes of ERA 1996, which does not impose vicarious
liability on employers. Second, the definition does not help in determining exactly what a
contract of service is.
Over the years, the courts developed several tests to distinguish employees from
independent contractors. One of these tests held that if the boss had control not only of what
work was done but also of how the work was done then the worker was an employee.
If there was no such control the worker was an independent contractor. Under another
test Lord Denning said that employees were ‘part and parcel of the organisation’, whereas
independent contractors were not.
The modern approach is that there is no single test which can always provide the right
answer. InReady Mixed Concrete (South East) Ltd vMPNI (1968) Mackenna J created
the multiple test. Under this test a worker will be an employee if three conditions are
satisfied:
(i) The worker agrees to provide his own work and skill in return for a wage or other
payment. A worker who can send a substitute to do his work is most unlikely to be an
employee.
(ii) The worker agrees, expressly or impliedly, that he will be under the control of the
person paying for his work.
(iii) The rest of the terms of the contract are consistent with a contract of employment.
This would include matters such as who paid the worker’s tax, what type of national
insurance contributions were paid and who provided equipment.
