When Can Employees Be Liable for Mistakes Made at Work? (2020 Update)
Being an employer often means that your business will be responsible for mistakes made by employees. Read about when there are exceptions to this rule.
If you run a business and employ workers, you may wonder if you’re solely responsible for every action they take. Employers are generally responsible for everything that happens in the workplace. This includes the actions of their employees and any mistakes they make. This is because employees are acting on the employer’s behalf. Yet, in some cases, workers themselves can also be personally liable. Conversely, you may wonder as an employee if you can be held legally responsible if anything happens at work. This guide outlines where this can occur and what the law says about it.
Liability for the mistakes of employees
In the workplace, employers are normally liable for the actions and mistakes of their employees. Employers subsequently need to ensure that they train their employees properly and provide guidance. This is known as vicarious liability. For example, if an employee at your local grocery store spills something without cleaning it up and you slip over, the store would be legally liable. However, in some cases both the employee and employer can be legally responsible. This can happen if the employer can prove they took all reasonable steps to prevent the conduct of the employee. Further, joint liability can arise in cases involving bullying, harassment, discrimination and negligence. Similarly, negligence cases usually involve joint liability. An exception to this is if the employee displayed serious or wilful misconduct.
Personal liability can also arise in cases of negligence on the part of the employee, especially if that employee is a professional. Cases which hold employees personally liable often involve employee misconduct (such as giving improper advice, or deceptive or misleading information), if the misconduct leads to damages to a party. Personal liability may also arise in regards to obtaining confidential information and intellectual property without the consent of the employer. Both of these examples would ordinarily also involve a breach of the employment contract.
Employees have a general duty to behave in a way that is not dangerous or harmful to themselves or others. Most workplaces have health and safety requirements put in place to prevent workplace misfortunes, such as a drugs and alcohol policy. If an employee behaves recklessly (eg. misusing equipment, ignoring hazards, or ignoring WHS instructions), they can be personally liable for the injury or damage caused. This can also lead to criminal prosecution.
How to Protect Yourself Against Liability
Protection should start at the beginning of employment with an employment contract. By ensuring you have adequate protection under the contract, you could protect yourself against claims for personal liability. You may even want it looked over by a contract lawyer to ensure you are properly covered. If you’re an employer, you should dedicate time to ensure your employees understand safety guidelines.
If you already have a personal liability claim against you, then you may be able to claim damages from your employer if you were performing a duty instructed by them. Such instances are covered under the Employees Liability Act 1991 (NSW). It does not include breaches under the Trade Practices Act or the Fair Trading Act. Most of the protection in regards to employees comes under the responsibility of the employers. They should ensure that their practices do not contravene these relevant acts or any other rules and regulations. This includes getting public liability insurance to protect the company and employees from claims for damage of property and also personal injury to third parties.
Employees can be personally liable for conduct and their mistakes in the workplace, although this is rare. This can include joint and also personal liability, and can arise for a number of reasons. For an employee, the best form of protection is to understand your employment conditions and follow all rules and procedures. If anything is unclear, it’s always better to ask your employer rather than operate under assumptions. If you’re an employer and want to make sure you’re protected in the event your employees make mistakes, it is recommended that you talk to an employment lawyer.
Akira is a legal intern at Lawpath working in the content team. She is currently studying a Bachelor of Arts and a Bachelor of Laws at Macquarie University.