Imagine if one of your employees steals from one of your clients. You would assume that dismissing the employee and reporting the matter to the police would resolve the issue wouldn’t you? Well, think again – because you, the business owner, could find yourself held legally responsible for your employee’s actions, as a recent ruling demonstrates.
It is a long established principle of law that an employer will be responsible for acts carried out by their employees when done ‘in the course of their employment’. Therefore, it is possible for a third party who has suffered as a result of an act carried out by an employee to make a claim directly against the employer. It will be for the court to decide whether, in each particular case, the act undertaken by the employee was done ‘in the course of their employment’ or not.
Yet most business owners will be unaware of this and will be shocked to hear that they could ultimately be held responsible for their staff’s wrong doing.
This principle was put to the test in the recent case of Brink’s Global Services Inc and others v Igrox Ltd  EWCA Civ 120, when an employee, who had been tasked by his employer, Igrox Ltd, with fumigating a wooden container full of silver bars, stole 15 of the silver bars.
Brink’s Global Services, as owners of the silver bars, made a claim against Igrox Ltd for the losses that they had suffered on the basis that they were responsible for the theft carried out by their employee. In a result that may surprise many people, The High Court and the Court of Appeal agreed with Brink’s.
The Court of Appeal considered that as only Igrox employees were authorised to enter the container and deal with the contents, this was something that they had been instructed to deal with by their employer. The Court also held that the theft of the contents of the container was a risk so closely connected to the activity that the employee had been asked to carry out by Igrox, that they should be responsible for the actions of this particular employee.
The decision in this case should serve as a reminder to employers of the importance of properly assessing the risk to third parties caused by the actions of their employees, of providing employees with appropriate supervision and making sure that adequate insurance is in place.