Originally published November 2005

Two Employers can be vicariously liable at the same time Employers know that they take the rap for their own employee's errors and negligence. Technically, this is where an employer is 'vicariously liable' for his own employee's actions carried out in the course of the employee's employment. However, the Court of Appeal has extended an employer's liability so that, in the right circumstances, both the contractor and sub-contractor will be jointly vicariously liable.

It is common in the construction industry for subcontractors to control/supervise the work of employees of other sub-contractors. In doing so they are effectively 'borrowing' that employee from another sub-contractor. The risks associated with this practice and in particular 'bodyshopping' arrangements have been highlighted by the Court of Appeal's decision.

In this case, Viasystems had engaged Thermal Transfer to install air conditioning at its premises. As is common under such contracts, Thermal sub-contracted some of the work to S & P who in turn contracted with CAT to provide labour for this work. Mr Strange was employed as a fitter's mate by CAT but at times was supervised by an employee of S & P. Mr Strange negligently caused a flood at the premises of Viasystems which resulted in extensive damage. As a result, Viasystems brought a claim against Thermal, S & P and CAT. The matter eventually reached the Court of Appeal which found that there was no reason why dual vicarious liability could not exist. It stated that a long standing assumption that vicarious liability could only reside with one employer was unfounded.

The Court of Appeal found that whilst neither CAT nor S & P were themselves negligent, they both shared control of Mr Strange and therefore theoretically were both obliged to stop him from carrying out the negligent act. As a result of this, both CAT and S & P should share the liability for Mr Strange's negligent act, given that they had shared the right of control over Mr Strange.

The Court of Appeal did, however, restrict the application of dual liability to situations where both parties exercise a joint right of control over the employee and where the employee is ‘so much part of the work, business or organisation of both employers’ that it is appropriate to impose dual liability. The Court of Appeal also considered the issue of contribution to this liability for both parties. They reached the logical conclusion that if both parties share control of the employee, then they should both share equally in the liability. Therefore, each of S & P and CAT had to contribute 50% of the total liability.

Given the need for dual control to be in existence, this case raises significant issues as to risk allocation in some contracting arrangements where employees are being used but are being directed by more than one company. As such, the case is likely to have a major impact on the allocation of risk in such situations and contractors would be well advised to ensure their contracts hive this risk off. This should help avoid the kind of nasty surprise that S & P and CAT have just shared.

(Viasystems (Tyneside) Limited v (1) Thermal Transfer (Northern) Limited (2) S & P Darwell Limited (3) T Hull and C Day trading as CAT Metalwork Services [2005] EWCA 1151)

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