VICARIOUS LIABILITY and the Recruitment Industry

1. VICARIOUS LIABILITYand the Recruitment Industry Paul McNally Towergate Insurance 5 March 2013

2. Introduction • What is Vicarious Liability? • How does it affect you? • What can you do about it?

3. Vicarious Liability Simplified definition in this context • The liability of an Employer arising from the actions of their Employees that are committed during the course of their employment.

4. Vicarious Liability • This can be liability for injury, damage or errors and omissions in the course of the work. • Employer does not need to be at fault themselves, just deemed to have authority.

5. Implications • Responsibility for actions of the temp workers, including • Damage to third party property • Injury to third party persons • Errors and omissions • In addition to the traditional risks of their own mistakes • Not usually applicable to Permanent placements.

6. Employment Status • The employment status of temporary agency staff is unclear in the law. • Temporary worker can be deemed an employee of agency despite no control or supervision. • Certain factors can affect the likelihood of temporary worker being deemed an employee o the agency.

7. Agency Worker Regulations 2010 • Came into effect 1 October 2011. • Giving agency workers the same basic employment conditions as directly employed staff. • Subject to 12 weeks continuous work in the same role. • Does not clarify employments status. • May increase likelihood of temporary worker being deemed as employee of the agency.

8. Standard Contract Conditions • REC model can be used by member agencies. • Seeks to make end client the employer of the temporary worker. • Employment status still not 100% clear and could be challenged. • Contingent liability could still arise.

9. Non-standard Contract Conditions • Larger clients may insist • Onerous clauses, not just for insurance/indemnity. • Employment status can be passed back to agency. • May expressly make agency responsible for errors and omissions of temporary worker. • Must be disclosed to insurance underwriters. • Broker/insurer contract vetting services.

10. Insurance – Standard Non Vicarious • May only cover acts of negligence, errors and omissions by the agency itself. • Errors and omissions committed by the temporary worker would not be covered.

11. Insurance - Vicarious • Extended specialist recruitment policies. • Rating and exposure. • Not an off the shelf solution. • Do you have the correct cover?

12. Examples of liability Standard Non Vicarious • Agency own staff negligent in checking qualifications, experience of references. Vicarious • Breach of Covenant committed by a temporary worker. • Software engineer produces a faulty system. • Medical professional administered incorrect treatment.

13. Summary • Employer can be liable for actions of employees. • This can include Employment Agencies. • AWR and Terms of Business can affect this. • Protect with insurance. • Cover must be correctly advised.