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Insights

Not-for-profit Alert

Is your organisation liable for the criminal acts of employees and volunteers?

| Published by Michael Gorton AM

It is well established that an employer can be liable for the negligent actions of its employees.

A decision in the High Court has posed the question whether an employer is also liable where an employee commits a criminal or wrongful act intentionally, such as criminal child abuse.  In other words, if an employee commits fraud, abuse or even manslaughter - will the organisation be liable? 

The decisions of the High Court in NSW v Lepore, Rich v Queensland and Samin v Queensland considered this question.

These cases relate to the liability of an organisation for the sexual abuse perpetrated by its teachers.  They occurred in circumstances where it was not alleged that the organisations could be liable by reason of any act or omission on their own part.  The question asked is why the organisation should be liable when the acts of the teachers are clearly beyond the scope of their duties and clearly contravene the organisation’s policies and directions.

Non-Delegable Duty of Care

Schools, for example, are subject to what is called the “non-delegable duty” of care to students.  Hospitals have a similar duty to patients. It exists and extends beyond the simple duty to “take care”.  For example, an organisation has such a duty towards its students, because it assumes a special responsibility for the students in its care.  The same can apply for NFP organisations in health, disability and aged care sectors.

In undertaking the care, supervision and control of students, the organisation has a non-delegable duty of care. 

The High Court recognises that this duty amounts to an absolute duty to prevent injury or damage.

The duty cannot be delegated to others (in the case of schools, to teachers).  The organisation has a duty to act with reasonable care to prevent harm coming to those within its care. 

In this case, the High Court found that an intentional wrongful or criminal act is more than a failure to take reasonable care on part of the delegate (the teacher) and is thus outside the employers non-delegable duty of care.  Accordingly, the Court confirmed that the non-delegable duty of care remains confined only to negligence, and not to intentional criminal acts.

Of course, as the Royal Commission has shown, negligent claims continue as many organisations have, historically, failed to appropriately provide care and supervision or to have appropriate policies and procedures in place.

Vicarious Liability

An employer is vicariously liable for the actions of an employee - where the actions are connected with the employee’s responsibilities, and to the extent that they are within the scope of the employment.

The question raised by the High Court was how to determine whether an intentional criminal act could constitute part of the employee’s employment.  The High Court had to consider whether intentional criminal acts were outside the employee’s employment to such an extent that the employer should not be liable.

The majority of the High Court determined that intentional criminal acts can be within the scope of employment if there is sufficiently close connection between the criminal act and the employee’s authorised conduct.  Thus the employer will still be liable if a criminal act has taken place in relation to powers, duty or responsibility which has a sufficiently close connection with the tasks of the employee (eg. special intimate care of a student or patient with special needs).

The Court held that such a close connection would exist where the nature of the employers business, and the powers and duties granted to the employee, created or materially increased the risk of the criminal conduct occurring.  Factors to be taken into consideration would include the precise role of the employee, the age and vulnerability of the victim, and the circumstances and nature of the wrongful act.

Clearly the issue of sexual abuse in relation to students at an organisation, may be of such close proximity to the work carried out by the teacher.  There is a risk to organisations in these circumstances.

Similar principles apply in relation to NFP organisations in health, aged care and disability support.

A recommendation of the Royal Commission recently released is for a change in the law to make organisations liable for the criminal acts of its staff in the case of child abuse.

Organisations should review insurance arrangements to ensure that criminal acts of employees and agents are covered.  Some policies may exclude intentional criminal acts.

For further information please contact Michael Gorton AM from our NFP team. If you’d like to stay up to date with insights in the sector please sign up here.