The recent decision of the High Court in CCIG Investments Pty Ltd v Schokman  HCA 21 (Decision) serves to clarify when employers will, and importantly will not, be liable for acts of their employees which cause harm to other people.
The case involved familiar issues of negligence or misconduct by an employee (Negligent Employee) of the appellant company (Employer) after drinking alcohol on work premises, leading to an injury to another employee (Injured Employee).
The Employer employed the Negligent Employee and the Injured Employee (Employees) in the restaurant at a resort it managed in the Whitsunday Islands. The Employees’ roles required them to live on the island at the resort. At the relevant time, the Employees shared a room in accommodation provided by the Employer.
One evening, the Employees both went for a drink at the staff bar after finishing work. The Employees returned to their room at about 1:00am, but the Negligent Employee left shortly afterwards for some more drinks and the Injured Employee went to bed. Some hours later, the Injured Employee heard the Negligent Employee vomiting in the bathroom and walking around hiccupping. About half an hour later, the Injured Employee was again woken up by the Negligent Employee urinating on him in his bed. The Injured Employee inhaled and choked on the urine, and suffered a cataplectic attack caused by the emotional stress of the situation.
The question before the High Court was: was the Employer liable for the Negligent Employee’s acts?
When is an employer liable for an employee’s acts?
The High Court confirmed the long-standing principle that an employer will be liable for the acts of employees committed in the course or scope of the employment. In accordance with the Decision, the courts will assess what that scope is, the nature of the acts of the employee, and whether that nature of the conduct fell within the relevant scope.
The assessment of the scope or course of employment is directed to the question of what an employee is actually employed to do. Relevant considerations include the nature of the role, the ordinary duties, when the employee performs their duties and where they are employed to do it.
The assessment of whether the conduct fell within the scope of the employment requires an employer to have done more than just create an opportunity for the conduct to occur. Rather it requires the consideration being given to the level of connection of those acts with the core of the employment relationship. The Court determined that it is not necessary for the relevant conduct to be authorised by an employer. While authorised acts will almost certainly fall within the scope of the employment, unauthorised and even criminal acts which are found to be within the scope of employment may render an employer liable. Acts which are incidental to, or closely connected with, the employee’s duties will fall within the scope of the employment.
When is an employee on a frolic of their own?
The Court considered that an employer will not be liable where conduct is so remote from an employee’s duty to be considered outside of and unconnected with their employment. This is often described as an employee being on a ‘frolic of their own’.
Conduct will be found to be a ‘frolic’ where an employee is acting outside the ordinary course of the business of the employer. This includes where behaviour which occurs during working hours is so far removed from what can be expected from an employee in their position.
In the Decision, the Court found that, the Employer created, at most, an opportunity for the Negligent Employee to engage in the conduct he did. However the timing, nature and circumstances of his conduct were so far removed from his duties working in the restaurant that the Employer was not liable.
While employers should be aware of the Decision and the principles contained in it, employers may still have other responsibilities in respect to the management of their employees, even in circumstances where common law vicarious liability will not attach to their conduct. Under work health and safety legislation, businesses have a responsibility to ensure the health and safety of workers and visitors so far as is reasonably practicable. Under anti-discrimination legislation, employers may have a responsibility to take reasonable and proportionate steps to eliminate forms of discrimination and harassment. These provisions may contemplate taking steps to prevent employees from going on ‘frolics’ of their own.
Our team at Kingston Reid is available to advise businesses on meeting their obligations, responding to issues of misconduct and limiting liability for unauthorised employee conduct. Please reach out if you require any assistance.