Of Employees

I’ve been doing a little reading on Vicarious Liability (VL) recently. Every employer out there should be aware of their exposure under this tort – start-ups even more so. VL is typically employer (ER) being held vicariously liable for any tort committed against a third party (P) by their employee (EE).

But that’s just the simplistic overview. The legal requirements for vicarious liability are that:

  1. there must be a legal tort committed by the EE against P;
    There must be one of the other legally recognised torts committed by EE against P. There is no ifs no buts. This was highlighted in the case of Kerajaan Malaysia v Lay Kee Tee & Ors which involved the pig farmers suing the government for negligence during the Nipah virus episode that resulted in 40+ deaths. It was held that they could not sue the government directly for negligence but had to first show that there was a tort committed by the government employee first, before that liability can be transferred to the government.
  2. that there exists a special relationship between ER and EE;
    Vicarious liability is by no means limited to ER and EE but that’s just the most common, and easy to understand. There are generally three tests that can be used to see if someone is in a special relationship:

    1. Control Test
      It was laid down in Short v J & W Henderson Ltd that four factors are to be considered i.e:

      • the power to selection in the ER.
      • the power to determine the salary or other remuneration.
      • the power to control the method in which the work was done.
      • the power to terminate the EE’s services.

      It was further added in Collins Hertfordshire CC that a contract of service existed if the employer had the power to instruct the employee and to control the method in which work was done.

      However, this test has been found wanting as there are lots of cases of people who are employees but whose employers have no power to control their work e.g. doctors in a hospital and other professionals.

    2. Organisation Test
      It was held in Stevenson, Jordan and Harrison Ltd that it was not so easy to differentiate between a contract of service with a contract for services. So, another consideration would be whether a person was integrated into the organisation or merely doing work for the organisation.

      In Mat Jusoh b Daud it was held that while the plaintiff was not their employee but an employee of their contractor, his work product was integral to their business and was therefore their employee. Hence, the integrity of the task being done is just as essential to determining whether a person is an employee, and not just to follow the classical definitions.

    3. Mixed Test
      This is also called the common sense test. It is essentially a combination of both the tests above to determine if any special relationship exists between the ER and EE.

    However, in Malaysia, the preference is to use the control test. I think that this is because that is much easier to prove on paper than to get into the convoluted and subjective organisation test. In a majority of cases, there is no problem in proving employment. However, there are some grey areas such as surgeons at a hospital.

    In Tan Eng Siew v Dr Jagjit Singh, it was held that as the doctor had a private practice and was merely renting the hospital facilities such as operating room etc, the hospital could not be held liable to the plaintiff.

    Also, another grey area is where employees are seconded or lent to another organisation. It is held in Mersey Docs and Harbour Board that because the seconded employee, although working for the new employer, was actually still under the control of the old employer, the old employer was liable.

  3. the tort must be committed during the course of employment.
    The general rule is that if the tort was committed while in the ‘line of duty’, the employer should be held ultimately liable. This is much more difficult than it sounds because the problem then becomes, what is considered ‘line of duty’.

    • Carelessness while on the job.
    • Mistake of worker.
    • Worker delegating responsibility.
    • Worker acting for own benefit.
    • Protecting employer’s property.
    • Disobeying direct orders.
    • Frolicking.
    • Fraud.
    • Theft.
    • Sexual abuse.
    • Statutory duty.
    • Time of employment.
    • Location of employment.

    Each of these things have a whole set of issues to be considered. Time for that in a future blog entry.

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Shawn Tan

Chip Doctor, Chartered Engineer, Entrepreneur, Law Graduate.

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