Earlier this month, the Supreme Court handed down two important judgments which clarify how far an organisation can be made legally responsible for the wrongdoing of someone else connected to it.
In Morrisons v Various Claimants an employee, Mr Skelton deliberately uploaded the data of around 100,000 members of staff to a publically accessible website. He tried to cover his tracks by blaming another employee, but was found out, prosecuted and sent to prison.
Morrisons were then sued by around 5,500 members of staff for the misuse of their personal information. They alleged it was primarily liable for the breach and, alternatively, it was vicariously liable for the wrongful conduct of its employee. The Court of Appeal decided that Morrisons was vicariously liable for the breach and ruled that the employee's motive was "irrelevant" - our blog discussing that decision is available here.
In Barclays v Various Claimants, 126 claimants alleged they had been sexually abused the the late Dr Gordon Bates between 1968 and 1984. Barclays had engaged Dr Blake to undertake pre-employment medical investigations which took place at his home. In a surprising move, the Court of Appeal held that Barclay's was liable for Dr Bates' actions - because the relationship was akin to an employment relationship .
Both organisations appealed.
Supreme Court decision
Employers are only responsible for the negligent or wrongful actions of others if there is a relationship between the parties and it is fair to make one of them pay for the fault of the other. There must also be a sufficient connection between that relationship and the wrongdoing of the other person.
In Morrison's the relationship was clear; Mr Skelton was employed by it. But, were his actions so closely connected to those he was authorised to do, they could be deemed to be done in the course of his employment? Not in this case. Mr Skelton was not authorised to send sensitive staff information to a public site and did so out of malice. As the Supreme Court put it "the fact that his employment gave him the opportunity to commit the wrongful act is not sufficient to warrant the imposition of vicarious liability".
The Supreme Court held that the case against Barclays didn't even get off the starting blocks. The relationship between Dr Bates and Barclays was not one of employer and employee - or akin to it. Dr Bates had his own practice, his own clients, he worked for the NHS and also wrote a newspaper column. He provided services to Barclays and was paid a fee for each report he prepared: there was no retainer between the parties and he could refuse a referral if he wanted to. This was a classic 'independent contractor' relationship which at no point in time resembled "anything close" to an employment relationship.
These decisions will come as a welcome relief to many employers who were worried about the increasing scope of vicarious liability claims (and the cost of insuring against them). The Supreme Court has now made clear that employers will not normally be vicariously liable for the actions of any member of staff pursuing a personal vendetta. This means that the motivation of the wrongdoer is still relevant.
That doesn't mean that employers will be able to escape vicarious liability for any act by an employee just because it's malicious. The Supreme Court made it clear that Mr Skelton was acting "solely in pursuing" his own interests. In other cases there may be some underlying connection to work which would put any resulting damage squarely at the employers door.
Nor does this decision set aside the possibility of employers being found vicariously liable in the data breach context. The Supreme Court was not persuaded by Morrisons’ arguments that the Data Protection Act 1998 excludes vicarious liability for statutory and common law wrongs. Therefore, if a data breach is closely connected to an employee's employment, their employer could still be found vicariously liable for it.
Need more information?
Please contact our employment partner Kirsty Ayre if you need advice on vicarious liability.
Our fixed price employment law service
If you are interested in finding out about how we can support you with our fixed-fee annual retainer, or flexible discounted bank of hours service, please contact Gareth Finney: email@example.com or 0778 317 0084.