Errol Price, Legal Director at Symmetra Global, shares his insight on the crucial and often overlooked distinctions between statutory and common law vicarious liabilities. With a focus on recent discrimination and harassment cases, Price’s analysis offers clarity on employer responsibilities, potential defences, and the evolving standards of liability.
Statutory Vicarious Liability
Section 106 (1) of the Sex Discrimination Act 1984 which bears the statutory heading “vicarious liability” “provides that where an employee of a person “in connection with the employment of the employee… “ commits any one of certain defined unlawful acts (basically discrimination or harassment) the person (employer) becomes liable.
This statutorily created liability for employers is not the same as vicarious liability under the common law. The differentiating aspects of section 106 are frequently overlooked by commentators.
The Common Law Re-examined
The High Court of Australia in the recent decision of CGIC Investments Pty Ltd v Schokman [2023] HCA 21, noted that under the common law the doctrine of vicarious liability had, for close on a century, been an area of considerable jurisprudential confusion.
The case concerned two employees of CGIC who had been allocated shared sleeping accommodation on the Whitsunday Islands. Late one night, one of the employees had returned to the bedroom in a drunken state and proceeded to urinate on the sleeping form of the other employee who then suffered a cataplectic attack as a result.
In deciding whether the employer was liable to the injured employee, the High Court, particularly in the joint – concurring judgment of Edelman and Steward JJ., sought to clarify where Australian law now stands with respect to the principles of vicarious liability.
They explained that “… cases which have been described as concerning ‘vicarious liability’ now span across three different areas of law”. These three areas are:
- Firstly, where one person is an agent for another- there is a joint enterprise and the principal is liable because he/she has authorised, procured, or ratified the unlawful act. It applies to all principals, not only employers.
- The second is vicarious liability in its true sense. The employer is liable for negligent or intentional torts committed by the employee whether the wrongful act is authorized or not. The act must have been performed “in the course and scope of the employee’s employment “
- The third are cases of non-delegable duty, where an employer is under a duty to ensure that reasonable care is taken by employees or independent contractors in carrying out a task. If the employee or contractor fails to observe the required standard of care and causes harm when carrying out the task the employer is liable. The liability is primary but sometimes erroneously described as “vicarious”.
Different outcomes under common law and Statute
In CGIC the relevant criterion was true vicarious liability- whether the unlawful urinating occurred within the “course and scope” of the tortfeasor’s employment. Applying the earlier test laid down in Prince Alfred College Incorporated v ADC [ 2016] 258 CLR the Court reasoned that the wrongdoer was afforded merely an opportunity to do the wrong rather than the occasion. It was thus outside the course and scope of employment.
The result in CGIC should be contrasted with the decision of the Federal Appeal Court in South Pacific Resort Hotels Pty Ltd v Trainor [2005] FCAFC 130. The complainant employee had been sexually harassed on two occasions at night, outside of working hours by a co-employee. The harassment occurred at staff accommodation provided by the employer on Norfolk Island.
The employer was held to be liable under section 106 of the Sex discrimination Act, the court holding that the words “in connection with the employment” were of much wider import than the common law “in the course and scope of employment”. In Australia and similar jurisdictions expansive interpretation has consistently been given to provisions rendering employers liable for harassment and discrimination perpetrated by employees.
Employer’s Defense
The second major difference between common law and Sect 106 vicarious liability is that under the common law the employer faces strict liability. The defense available to a person (“employer”) under S 106(2) is sustained if the employer “..took all reasonable steps to prevent the employee or agent from doing the [ the unlawful act].”
Although the section refers to prevention directed at an individual, the evidence typically will relate to the whole organization and will encompass policies, adequate communication of prohibited conduct, training, monitoring, grievance procedures and so forth. Naturally, the scope of the steps taken will vary according to the size and nature of the organization. The courts will scrutinize each component of the measures taken to ensure that it is adequate and appropriate.
The New Dispensation
The newest addition to the mix is the introduction via sections 47B and 47C of the “positive duty” now resting on all employers to take reasonable and proportionate steps to eliminate discrimination and sexual harassment.
It is the AHRC which principally will investigate alleged breaches and take steps to ensure compliance with the positive duty. However, it may well be that in future, courts in assessing whether employers have established a defense under sect 106 (2) will have regard to this positive duty where the obligations are clearly more onerous.
Whatever, the developments in this area, it is clear that the bar for employers to escape liability for an employee’s sexual harassment is being set ever higher. Employers need to take pro-active steps or run the risk of having to foot substantial damages.
Errol Price has decades of experience in commercial law, and specifically as an advisor to leading companies on equity, discrimination and workplace relations. He has helped in formulating human resource and workplace relations policies for many multinational and blue-chip companies as well as advising clients on the impact of equity and anti-discrimination have helped position Symmetra as one of the leading consultancies on diversity and inclusion. He has expertise in the laws pertaining to discrimination, harassment and bullying in the Australian workplace. This has provided the legal foundation for Symmetra’s highly successful diversity, EEO and anti-bullying and harassment programs, delivered across Australia for the past 15 years.
In recent years, Errol has gained experience in the field of privacy and data security laws in Australia and globally due to the fact that Symmetra is a leader in the provision and administration of online assessments for leaders and employees working in mullti-jurisdictional businesses. . Connect with Errol via LinkedIn.
