Vicarious liability occurs when an employer becomes liable for negligent acts or omissions by their employee ‘in the course of employment’, regardless of whether the employer gave permission for the employee’s actions. Employers must ensure their employees always act in a safe and reasonable manner whilst ‘in the course of employment’. This is referred to as ‘strict liability’, which simply means that employers are liable for their employees’ actions regardless of whether it was the employee’s fault.

Vicarious liability is mostly associated with the employer/employee relationship.

There are two aspects of vicarious liability.  The first is the duty of care the employer has to its employees and the second is the employer’s responsibility for the acts or omissions of its employees.

What is meant by ‘in the course of employment?’

For an employer to be held vicariously liable for the negligent action of an employee, the negligent action must have a substantially close connection with the work the employee is required to perform for the employer.

For example, an employer may be vicariously liable for an employee builder who inadvertently leaves a ladder unsecured which results in another employee falling off the ladder. In this situation, the failure of the first employee to secure the ladder was within the ‘course of employment’.

Conduct which occurs outside work hours or outside the workplace may still have a sufficient connection to the employment to make an employer vicariously liable.

‘Employees’ may include workers who are not necessarily employed by the employer, for example, agents, workers on a contract or commission-based workers, union and employment agency representatives.

Can an employer be held vicariously liable for criminal actions of its employees?

The answer to this question will depend on whether there was a sufficient connection between an employer’s actions/omissions contributing to a risk of the criminal act and the employee’s criminal act, for example, sexual abuse of a pupil by an employed teacher where the abuse was committed in the course or scope of the teacher’s employment.

Vicarious liability of an employer is decided on a case by case basis as to the role and nature of the employee’s responsibilities when determining whether a job provided an opportunity for an employee to engage in wrongful conduct.

If you have suffered an injury from a fellow employee’s criminal actions and are not sure whether you can claim compensation from your employer, we recommend you seek legal advice as soon as possible.

When is vicarious liability considered in discrimination claims?

There are specific vicarious liability provisions in discrimination legislation where employers can be held liable for the discriminatory or harassing conduct of their employees.

While the employee who engages in the discriminatory or harassing behaviour remains personally liable for their conduct, the employer can also be included as a party to any complaints made about the conduct.

In those circumstances, employers may be ordered by a Court to pay compensation to an employee who has been sexually harassed or discriminated against in the workplace by another employee when such conduct causes anxiety, depression, and other psychological effects. Employers may also be liable to pay compensation for economic loss if an employee is forced to leave their employment because of the harassment and/or discrimination.

An employee is entitled to lodge a complaint with the Australian Human Rights Commission (AHRC), within 12 months of when the harassment or discrimination occurred. An employee may also be able to make a complaint to a state or territory anti-discrimination or human rights commission.

The AHRC may investigate and conciliate the employee’s complaint to see if a settlement can be reached.  The AHRC cannot make any determination about whether the conduct complained of is unlawful and if a settlement is not reached, the complaint will be terminated.  The complainant will then have 60 days to make an application to the most appropriate court in the Federal jurisdiction.

A similar process is adopted in the state and territory jurisdictions.

If a Court determines that unlawful discrimination or sexual harassment has occurred, the Court can award damages. For example, in a recent case, an employee who was sexually harassed received $100,000 in compensation for the value of loss of enjoyment of life and the mental illness and distress resulting from the sexual harassment, and $30,000 in compensation for loss of income.

In another case, an employee was awarded $120,000 in compensation for loss of income and psychological distress. A further $50,000 in compensation was awarded for aggravated damages because the employer failed to stop or prevent sexual harassment from occurring.

What ‘reasonable steps’ should employers take to prevent vicarious liability?

Under discrimination legislation, employers can avoid vicarious liability if they can demonstrate they have taken reasonable steps to prevent the discrimination or harassment from occurring.  This is largely determined on a case-by-case basis.

Generally, to avoid any vicarious liability, employers should implement workplace policies and training that address discrimination and harassment, including an internal complaint-handling process.

In implementing the abovementioned policies, employers should consider factors such as:

  • size, structure, and nature of work
  • demographics of their employees and level of adequate employee supervision
  • whether there have been previous wrongful acts by employees
  • industrial awards and agreements that may cover their employees

The above case examples demonstrate the importance of having effective procedures in place that can prevent and manage sexual harassment in the workplace, and to avoid being liable for significant amounts of compensation.

If you are an employer and want to minimise your risk of paying out compensation for a sexual harassment claim, we recommend you speak to our experienced employment lawyers.


Vicarious liability means an employer may be held responsible for ‘wrongful actions’ of an employee ‘in the course of their employment’.

Vicarious liability can be a complex area of law so we strongly recommend you seek legal advice, if you believe your employer may be vicariously liable for an injury you have received during your employment.

If you or someone you know wants more information or needs help or advice, please contact us on (02) 5127 5261 or email [email protected].