Negligence Law
Vicarious Liability
When a person commits a tort, and it is found that they were under the control or supervision of an employer, then the employer can face liability for the same. The employer need not to have had any hand in the tort, and may even have taken steps to ensure it would not happen, but the employer nevertheless will remain liable.
This is not to be confused with cases where plaintiffs ignore impecunious defendants and look for the wealthiest potential defendant so as to ensure a large award in damages can actually be paid out. In such cases the liability argued for is directly related to the causal chain, whereas in vicarious liability the employer is held liable simply due to their position as employer.
There are certain parameters within which vicarious liability exists. These are as follows...
Employee or Contractor?
There may be a question as to whether the perpetrator’s relationship with the business concerned is that of an employee or that of a contractor. This is important because a business is not vicariously liable if the tortfeasor is not their employee. This is a long established principle.
It has been the law in a number of countries until recently that a contractor may be considered to be an employee for the purposes of vicarious liability if the working relationship meets certain criteria. Those criteria are set out in Hollis v Vabu. However the High Court in Bird v DP overturned that rule throughout Australia in 2024. Since then vicarious liability only applies to the acts of proper employees and not those of contractors, no matter what details exist in their contractual relationship.
Statutory Exceptions
This does not affect statutory regimes such as workers compensation and others. As an example, Victoria enacted the Justice Legislation Amendment (Vicarious Liability for Child Abuse) Act 2026, which received Royal Assent on 24 February 2026. It creates statutory vicarious liability for certain child-abuse claims and extends it beyond formal employment to specified relationships akin to employment. It applies to abuse occurring before, on or after commencement. The Victorian Parliament expressly described the legislation as a response to Bird.
Workers’ compensation encompasses contractors if their working relationship is sufficiently under the power of the principal as to make them effectively employees. Hollis v Vabu is a guide to how these relationships are judged. The following facts were considered to be important:
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Who is obliged to supply and maintain equipment
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Who determines work practices
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Who is responsible for relevant documentation
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The nature of engagement
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Whether the worker is permitted to generate work for customers of their own
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Whether the worker is free to refuse work
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Whether the worker is presented to the public as a representative of the business
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The manner in which pay disputes are managed
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Whether uniforms and equipment are to be returned to the business
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Whether the worker has full control over their taking of leave
Unauthorised Acts by an Employee
If an employee performs an unauthorised act or performs an act in an unauthorised manner, and harm arises to another party due to that unauthorised act, then the employer is not vicariously liable. The bar to non-liability, however, is very high. The mere fact that the employee was disallowed from doing something illegal is not enough.
In Bugge v Brown there was a worker on a station was sent to a remote part of the property to cut thistles and told to stay overnight in an abandoned house. Instead he camped in the area where his work was and lit a campfire. The fire burned out of control and burned the neighbouring property. The court ruled that a master is liable even if the servant’s acts are beyond the authority they were granted. Vicarious liability still remains even if the employer can prove that he forbade the act or manner of acting responsible to the cause of harm. Even if the act is a crime, the employer is responsible as long as the employee is acting within the scope of employment.
Vicarious liability ceases only where the servant’s act is so alien to his/her employment that the act may as well be that of a stranger. An instruction or prohibition may limit the scope of employment, but it must be eminently clear and strong, such that disobedience makes the employee’s act ‘distinctly remote and disconnected from his employment’ as if performing the alleged act, he was ‘in the position of a stranger.’ For example, if a plumber does electrical wiring, this would be alien to his employment. On the other hand if a nurse takes over from a surgeon during an operation, this would not be sufficiently alien.
In Deatons Pty Ltd v Flew, a barmaid was being harassed by a drunk patron and threw beer in his face, also accidentally striking his face with the glass. The court considered the fact that it placed its staff in a position where self defence may be necessary at times. However the argument of self defence failed on the basis of other alternatives to a violent reaction being available. Thus the act of throwing beer was an act of passion and resentment, not done in the employer’s interests, or under the employer’s authority. The same principal applies to harm done by one employee to another in a recent case re-stating the above principal. CCIG Investments Pty Ltd v Schokman relates to actions by a drunken employee against another in shared staff accommodation. The fact that the wrong was committed outside the scope of employment excused the employer from responsibility, even though they had created the situation in which it occurred.
Note, however, that it has been said in other cases that if an employer knows the employee to be dishonest upon first engagement, then vicarious liability exists for their dishonest acts. This may mean by extension, that any propensity of an employee which is actually known to the employer will create liability when manifesting in a negligent act.
Hollis v Vabu Pty Ltd [2001] HCA 44
Bird v DP (a pseudonym) [2024] HCA 41.
Bugge v Brown (1919) 26 CLR 110.
Deatons Pty Ltd v Flew (1949) 79 CLR 370.
CCIG Investments Pty Ltd v Schokman [2023] HCA 21.
Morris v C.W. Martin & Sons Ltd [1966] 1 QB 716. This case concerns theft by an employee of a customer’s belongings.