The Legal 500

In ViaSystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd and others, the Court of Appeal looked at the issue of who was vicariously liable for the negligence of an employee working temporarily for another company. In that case the Court held that it is possible for both the general employer and the temporary employer (ie the company to whom the individual is temporarily providing his services) to be vicariously liable for the negligent acts of an employee. The key issue in the Court’s opinion was who had control of the individual’s work at the time that the negligent act was committed.

In Hawley v Luminar Leisure Ltd the Court of Appeal again considered the issue, this time in relation to a ‘door supervisor’ (aka a bouncer).

Facts of the case
W was employed by ASE Security Services Ltd (ASE) and had been supplied to work as a bouncer at a nightclub owned by Luminar Leisure Ltd (Luminar) in accordance with the terms of a services contract. While working at the club, W assaulted a member of the public, who suffered permanent brain damage. The victim brought negligence proceedings against ASE and Luminar on the grounds that each was responsible for W’s negligence – ASE as W’s general employer and Luminar as the temporary employer.

Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd
The Court of Appeal again looked at and approved the guidance set out by the House of Lords in the case of Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd. In that case the following issues were considered relevant when identifying which employer was vicariously liable:

1) Who engaged the negligent employee?

2) Who pays the negligent employee?

3) Who has the power to dismiss the negligent employee?

4) Who has the immediate direction and control of the negligent employee’s work?

5) Who is entitled to tell the negligent employee the way in which he is to do the work upon which he is engaged?

6) Who is entitled to give the orders as to how the work should be done?

Although the burden of proof is on the general employer to show that it is not responsible for the individual’s actions, the Court also found that it was necessary to focus on the negligent act and ask whose duty it was to prevent that act.

In this case Luminar and ASE had an agreement ‘for the supply of security services’. Under that agreement ASE warranted that it would have thoroughly checked each door supervisor that it provided as being suitable, and would have trained them to a standard approved by Luminar. The agreement also stated that any stewards provided by ASE would be employees of ASE, nothing in the agreement would render them employees of Luminar, and ASE would be responsible for any liabilities arising out of their employment.

In practice, the stewards reported to Luminar’s club manager and did as they were directed by her. They also wore Luminar uniforms and had given their written consent to comply with Luminar’s standards of service and codes of conduct.

No joint liability
On these facts, the Court of Appeal held that the High Court had been entitled to find that Luminar could be deemed to be W’s temporary employer for the purposes of vicarious liability, notwithstanding that ASE employed, paid and had the power to dismiss W.

Although Luminar did not involve itself in the detail of, or training in, methods of restraint, it did not mean that effective control of the doormen had not vested in it. Luminar had control of and responsibility for ASE’s employees in fact and by virtue of the services contract. In addition, there was no doubt that any customer, passer-by or police officer seeing the doormen in the Luminar uniforms would have assumed that they were Luminar staff. In effect, this is what they were held out to be.

The Court reiterated that vicarious liability requires no fault on the part of the employer or the deemed employer. It is simply a question of who was in control of the negligent employee at the relevant time.

When assessing the question of whether there was any dual vicarious liability on the facts, the answer to the question ‘who was entitled and therefore obliged to control W’s acts so as to prevent them’, was Luminar. ASE had no immediate or effective control over W’s activities. There was therefore no joint liability.

Comment
In the past it was always thought to be difficult for a ‘general employer’ to demonstrate that the temporary employer was vicariously liable for a negligent employee’s acts. However, in the context of the modern business environment, where contracting out and secondments are extremely commonplace, it will be increasingly easy for the general employer to demonstrate that the temporary employer has, for all intents and purposes, control over the ‘loaned’ employee. This is particularly true where a labour-intensive service is provided, there is no equipment on loan with the temporary employees, and the general employer has no day-to-day contact with or control over the ‘loaned employee’.

It is a good idea to include indemnities in secondment agreements and services agreements. However, although there was such an indemnity provision from ASE in this case, the company had in fact gone bust and was not good for the money. It is therefore advisable for such agreements to include an obligation on the general employer to take out insurance in relation to any negligence or other actions of employees supplied.