The recent case of Various Claimants v Wm Morrisons Supermarkets PLC  EWHC 3113 addressed the question whether an employer can be held responsible, together with its employee, for harm caused to third parties due to the criminal actions of this employee, when the employer is not itself at fault. This concept is generally known as “vicarious liability”. In this particular case, the court considered how the concept of vicarious liability operated where the employee’s criminal actions were intended to deliberately harm the employer.
An employee of Morrisons, whose role involved gaining access to and being entrusted with sensitive personal and business information, posted a file containing personal details of almost 100,000 co-employees on a file sharing website. The timing of the posting, just before Morrisons’ annual financial reports were announced, was likely to damage Morrisons’ share value. The claimants (a number of the affected employees) had not consented to their personal details being posted. The posting left them vulnerable to fraud and identity theft.
Decision of the High Court
The High Court confirmed an employer can be liable, together with an employee, for wrongful acts committed by this employee provided list: (a) etc. these acts closely relate to the acts the employee was authorised to do; and (b) it is fair and proper to regard these wrongful acts as being done in the ordinary course of the employee’s employment. The legal basis being that the employer should be held responsible for these wrongful acts insofar as it recruited this employee into that position.
However, the High Court went on to hold the employer should be held liable, together with the employee, for the employee’s wrongful acts even when the employee’s purpose in committing those acts were to harm the employer, rather than a third party. This was on the basis the employer rather than a wronged third party should bear the loss of the wrongful conduct. First, the employer is likely to have the means to compensate the third party, for example by having insured itself against the risk. Secondly, the employer always has some scope to control the employee, no matter how highly skilled that employee is, and the employer is capable of designing systems the employee must follow to prevent the wrongful conduct from occurring.
It would be reasonable for employers to assume that where an employee sets out to deliberately harm their employer’s business through unlawful criminal or negligent activity, the business should not have to pick up the bill for the damage caused. However, this case suggests otherwise. Even where the employee’s wrongful and criminal acts are intended to damage the employer, the employer will still be on the hook for its employee’s wrongful and criminal conduct.
This means that employers should be particularly careful to design and implement systems that employees must follow in order to prevent wrongful conduct of employees from occurring. In addition, employers need to be mindful that the courts will generally consider it just that the loss caused by this wrongful conduct falls on the employer rather than on a wronged third party.
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