5 questions about vicarious liability, answered

Did you know that Australian employers can be held legally responsible for discriminatory and harassing behaviour by their employees if it happens in connection with the workplace? This is known as vicarious liability. But does this mean you’re responsible for every act or decision your employees make? Not quite!

This article dives into when vicarious liability applies and offers practical tips to help protect your business from unnecessary risks.

1. What is vicarious liability?

Vicarious liability means that an employer can be held legally responsible for their employees’ actions, even if the employer wasn’t directly involved. This principle recognises that employers benefit from their employees’ work and must also bear accountability for any harm caused by their employees’ negligence or wrongful conduct.

2. Where does vicarious liability apply?

Employers may be held vicariously liable for discriminatory or harassing behaviour by their employees if it occurs in the workplace or is connected to their employment. This connection can extend to various contexts beyond the physical workplace, such as work-related events or activities, including:

• Employer-sponsored events, including seminars and conferences;
• Functions like Christmas parties and after-work drinks; and
• Business trips.

Importantly, employers aren’t only liable for physical behaviour, but it can extend to the use of phones, computers, and social media accounts if there’s a connection to the workplace.

3. Who does an employer’s vicarious liability cover?

Employers can be vicariously liable for discriminatory and/or harassing behaviour undertaken by:

• An individual/group of employees;
• Directors;
• Supervisors;
• Managers;
• Workplace participants (i.e., when two individuals work on the same premises but have different employers);
• Agents;
• Contract workers or people being paid commission;
• A partner of a company harasses another partner;
• Members of organisations that grant occupational qualifications;
• A person employed by a trade union harassing a member; or
• A person operating an employment agency who harasses someone who uses the agency.

4. To what extent are my employees liable?

The individual(s) who bullies, harasses, or discriminates against others in the workplace are directly liable and can be personally sued if a complainant individually names them in a claim. However, if the employer can’t demonstrate that all reasonable steps to prevent discrimination and harassment have been taken, they may be jointly liable for the employee’s behaviour.

This then raises the question: what are all reasonable steps? There’s no singular definition for this in anti-discrimination legislation because what’s reasonable for one business may not be reasonable for another. Hence, business owners are required to consider what steps are practicable within the context of their workplace. In making this determination, employers should consider:

• size and structure of the organisation;
• resources available to the organisation;
• type and nature of work undertaken by the organisation;
• composition of the organisation’s employees (i.e., number of women, young workers, older workers, people with disabilities, people from diverse backgrounds);
• workplace culture;
• any previous incidents of discrimination and/or harassment in the workplace;
• the degree of supervision provided to employees;
• provisions relevant to bullying, harassment and/or discrimination, if any, in industrial awards or agreements; and
• any other relevant factors, including working hours, geographic isolation, live-in arrangements or duties which require working in close physical proximity with others.

5. What steps can I take to minimise my vicarious liability and eliminate workplace discrimination and harassment?

There are numerous strategies that businesses can adopt to minimise their vicarious liability. These include, but aren’t limited to:

• Having comprehensive policies regarding discrimination, harassment and grievances;
• Ensuring the senior management team understands, enforces, and regularly reviews the policies so that they can proactively identify and address issues;
• Provide employees with an opportunity to read, acknowledge and receive training in relation to the aforementioned policies;
• Monitor the workplace environment through mechanisms including regular catch-ups and surveys;
• Nominate and train a harassment contact officer, of both sexes, who can discuss any queries, concerns or complaints regarding discrimination and harassment with employees; and
• Equip employees with information about agencies external to the business, including the Australian Human Rights Commission (AHRC), that can provide them with advice regarding discrimination and harassment.

Not only are the above measures useful in minimising an employer’s vicarious liability exposure, but it is also essential to comply with the new positive duty requirement. As a refresher, in late 2022, the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (Respect at Work Act) was introduced which imposed a positive duty on employers to take reasonable and proportionate measures to eliminate, as far as possible, unlawful sex discrimination, sexual harassment, hostile working environments and acts of victimisation in the workplace.

Remain compliant with Citation HR

Our HR software has a library of policies, documents, and templates so you can ensure you remain compliant when creating policies, procedures, and processes for employees. Even better, our team of HR experts can help tailor workplace policies for your business via our HR Advice Line.

If any of this information has raised questions about vicarious liability or you have another workplace matter you need assistance with, please reach out to our friendly team for a confidential, no-obligation chat.

About our author

Carla Novacevski is a Workplace Relations Consultant based at Citation HR’s Melbourne Office. In her role, Carla tends to client queries via the HR Advice Line. She is currently completing a Bachelor of Commerce and Law, majoring in Accounting, and is passionate about expanding her knowledge through a variety of placements in multiple areas of law.