A recent decision by the High Court of Australia has helped to clarify and reinforce the boundaries of an employer’s vicarious liability for the actions of its employees. The Court considered when the wrongful actions of employees are within the “course or scope of employment” or whether it may be employees going on a “frolic of their own.”

What was the case about?

The case involved two employees who, as part of their contract of employment, were required to live in shared accommodation at the resort at which they worked. Late one evening after finishing work at a restaurant within the resort, one of the employees became intoxicated. At approximately 3:30 am, that employee (under the influence of alcohol) began urinating into another employee’s mouth. The victim of the conduct woke up in a distressed condition and was unable to breath as he was inhaling and choking on the urine and consequently suffered a cataplectic attack because of the incident. The trial court found that the offending had not acted intentionally and was “in a state of semi-consciousness” due to his intoxication.

What did the High Court find?

The High Court found that the employment enterprise was not vicariously liable, and in so doing overturned the Court of Appeal’s decision. The High Court noted that the course or scope of employment may be “functional, geographical or temporal” but saw that this was not relevant to the present case since both employees were outside the scope of carrying out of their duties at the time. The offending employee’s actions fell outside the course or scope of employment since they were not “what the employee [was] employed to do on behalf of the employer.” Rather, he had engaged in a ‘frolic’ of his own which the Court characterised as “[a]n employee’s significant deviation from the employer’s business for personal reasons”.

While it was acknowledged that the contractual arrangement gave the “opportunity” for the wrongful action by placing them in the same accommodation, this was found not to have given “occasion” for the behaviour. The Court noted the difference between “opportunity” as likely a “spontaneous” wrongful act while “occasion” involves “taking advantage of some aspect of their role to commit the wrongful act.”

The Court also noted that whether the employer had a duty of care to protect the victim did not arise in a case involving vicarious liability. Rather, establishing a “sufficiency or closeness” between the wrongful act and the employee’s powers and duties is central to establishing vicarious liability. Unauthorised or even illegal acts are not necessarily “so alien” to an employee’s employment that vicariously liability ceases, but rather it must be determined that the wrongful actions were effectively that of a “stranger” rather than an employee.

Key takeaways for employers:

• Vicarious liability can only arise in cases where an employee acts within the course or scope of their employment. It is the nature of what the employee is actually employed to do on behalf of the employer which is central.
• Merely giving opportunity for a wrongful action is not enough for vicarious liability, the employer must also give occasion for it.
• Unauthorised, prohibited and even illegal acts could still see an employer held vicariously liable if the acts are “so connected” to authorised actions that they are “improper modes” of carrying them out.

People + Culture Strategies