When is an employer liable for an employee's actions?

Court of Appeal overturns High Court's decision

In Bellman v Northampton Recruitment Limited, the Court of Appeal has overturned the decision of the High Court and held that a drunken attack by the managing director of a small business on an employee was in the course of employment. We reported on the High Court's decision in the December 2016 edition of this bulletin.

An employer will be vicariously liable for wrongdoing by an employee if that wrongdoing is "closely connected" with the employment. This was established in the case of Lister v Hesley Hall Ltd [2001] UKHL 22. The courts have applied a broad interpretation of this test. In the recent case of Mohamud v WM Morrison Supermarkets Plc [2016] UKSC 11, the Supreme Court held a supermarket vicariously liable for an employee's assault on a customer at one of its petrol stations. This was on the basis that there was a sufficiently close connection between the assault and the employee's job of attending to customers and the wrongdoing was a misuse of the employee's position as a petrol attendant.

The case in question

In this case, Mr Major was the managing director of Northampton Recruitment Ltd. Mr Bellman was employed by the company as a sales manager. In 2011, the company organised a Christmas party for employees and their partners which took place at a golf club. After the party, a number of people who attended went on to have impromptu drinks in the bar of a hotel. The company paid for taxis to the hotel and for some of the impromptu drinks.

At around 2am a work-related discussion began concerning the placement of a new recruit within the business. Mr Major became angry and lectured his employees about his freedom to make decisions as the owner of the company. Mr Bellman, who had known Mr Major since childhood, challenged Mr Major in a non-aggressive way. Mr Major then moved towards Mr Bellman saying: "I f***ing make the decisions in this company; it's my business. If I want him based in Northampton he will be f***king based there". He then punched Mr Bellman twice. Mr Bellman fell to the floor, fracturing his skull. He suffered severe brain damage.

Mr Bellman sued his employer for damages in the High Court. The High Court held that the company was not vicariously liable for the assault. It found the impromptu drinking session was separate from the Christmas party in time and place. It decided that there was insufficient connection between Mr Major's role as managing director and the assault and so the wrongdoing was not in the course of his employment.

Court of Appeal did not agree. It made clear that two questions must be considered: what are the functions or "field of activities" entrusted to the employee (or what is the nature of his job); and is there sufficient connection between the position in which he was employed and the wrongful conduct to make it right for the employer to be held liable?

Lady Justice Asplin gave the leading judgment and held that Mr Major had a very wide field of activities as managing director. She made clear that the question is not what the employee is expressly authorised to do. She noted that vicarious liability had been found in cases where an employee had misused their position in a way which injured someone else. She also held that there was sufficient connection between Mr Major's job and the assault.  She decided that Mr Major had chosen to wear his "metaphorical managing director's hat" at the drinks session (even though it was separated from the work's Christmas do in terms of both time and location). She noted that the conversation had focused on work for around an hour before the attack. She held that the assault was an attempt to assert Mr Major's authority and arose out of a misuse of the position entrusted to him as managing director. She held that those attending were doing so as subordinate staff members and managing director.

Lord Justice Irwin agreed with the judgment but wished to emphasise that "this combination of circumstances will arise very rarely. Liability will not arise merely because there is an argument about work matters between colleagues, which leads to an assault, even when one colleague is markedly more senior than another. This case is emphatically not authority for the proposition that employers become insurers for violent or other tortious acts by their employees."

This judgment is in line with that of the Supreme Court in Mohamud. It highlights the risk that an employer will be found vicariously liable for a wrongdoing where there is a close connection between the tortious act and the nature of the job carried out by the wrongdoer and in particular where the wrongdoing arises from a misuse of the position in which the wrongdoer is employed. Employers should be aware that vicarious liability can arise for acts carried out on or off work premises and both inside and outside working hours. The key question for the court will not be, did the act happen at work or at a work event, but rather, was the act closely connected with the wrongdoer's job.