From Leakage to Liability – Navigating Employer Liability for Employees Drunken Behaviour

The case revolved around Mr Schokman, an employee of a resort in the Whitsunday Islands off the coast of Queensland. As Mr Schokman slept, he was unexpectedly awakened by Mr Hewett, who was in a semi-conscious state, urinating on him. This unexpected act caused Mr Schokman to choke and suffer a subsequent cataplectic attack, characterised by sudden muscle weakness triggered by the distressing situation.

The central question was whether the employer could be held responsible for the actions of their employee.

What is ‘vicarious liability’

Vicarious liability is a legal concept that holds employers responsible for their employee’s wrongful acts, whether they occur within the workplace or are connected to the employee’s job. This can include incidents at work functions like Christmas parties, work-related conferences, and even during work-related travel. In such cases, the employer can be held accountable for the actions of their employees.

The Decision

The High Court overturned the previous ruling and held that CCIG Investments Pty Ltd, the employer, could not be held vicariously liable for Mr Hewett’s actions. They stressed the importance of a strong connection between Mr Hewett’s wrongful act and his employment is needed for vicarious liability to apply.

Different Perspectives

While all the judges agreed on the outcome, they provided different perspectives on the reasoning and factors to consider in determining employer liability. These are summarised below:

• (i). Kiefel CJ, Gageler, Gordon, and Jagot JJ: The majority opinion focused on the need for a close link between the employee’s wrongful act and their job responsibilities for vicarious liability to apply.
• (ii). Edelman and Steward JJ: These judges highlighted the historical confusion surrounding the concept of vicarious liability and called for a coherent understanding of its different applications.
• (iii). Gleeson J: Gleeson J. agreed with the majority, emphasising the importance of the course of employment and the distinction between an “occasion” and an “opportunity” in determining employer liability.

Key takeaways

 The test for vicarious liability, as established in the case of Prince Alfred College Inc v ADC [2016] HCA 37, has been upheld. This means that for an employer to be held liable for an employee’s wrongful act, the act must have occurred within the course and/or scope of the employee’s employment.

• Establishing vicarious liability goes beyond the mere fact that the employment provided an opportunity for the incident to occur. The employer’s liability is contingent on a stronger connection between the employee’s wrongful act and the scope of their employment.
• Significant emphasis is to be placed on identifying the specific tasks an employee was hired to perform and how those tasks were represented to others. This plays a central role in determining whether an act falls within the course and/or scope of employment” for the purpose of vicarious liability.
• To establish an act as falling within the course and/or scope of employment, certain factors must be considered, such as the employee’s authority, power, trust, control, and the potential to establish intimacy with the victim. These elements play a crucial role in determining the scope of an employee’s actions for the purpose of vicarious liability.

How does this impact your business?

CCIG Investments Pty Ltd v Schokman offers valuable lessons for both employers and employees. For employers, it emphasises the importance of having clear employment contracts and guidelines in place. Employers should make sure that their employees understand what is expected of them during work hours and what actions are not permitted.

Whereas employees should be aware of their responsibilities and act responsibly both on and off the job. While employers are generally not held liable for an employee’s actions outside of work, it is always important to maintain professionalism and uphold the values of the workplace.

What should you do, and how can we help?

Practical tips for employers to reduce their liability:

• Clear Policies: Develop comprehensive policies that outline expected behaviour and conduct both during work hours and in employer-provided accommodations. Make sure all employees are aware of these policies.
• Training Sessions: Conduct regular training sessions to educate employees about the policies and the potential consequences of violating them.
• Alcohol and Substance Use Policies: Implement and enforce clear policies regarding alcohol and substance use during work hours and in company-provided accommodations.
• Accommodation Agreements: Include specific terms in accommodation agreements outlining expected conduct and use of provided facilities.

CCIG Investments Pty v. Schokman serves as a navigational beacon for employers and when they may be held vicariously liable for the actions of an employee. The Court will have regard to an employee’s role and scope of employment to determine liability. Moreover, in certain cases, the court may also consider any special role assigned to the employee. This ruling provides clarity on the factors that influence employer liability and highlights the importance of a thorough assessment of the employment context when determining accountability for employee actions.

At Hitch Advisory, we’re here to help employers stay ahead of the curve. We offer comprehensive support, from reviewing current employment agreements and policies to preparing future contracts and internal documents that incorporate the new changes. By partnering with us, employers can feel confident that they’re creating a fair and compliant workplace that prioritises the needs of their employees.