Employer Liability for the Actions of their Employees

Nov 4, 2020

In an Old Mutual case and a Naspers (now Media24) case the Labour Court’s decision serve as lessons to employers that they must take proactive steps to avoid being held liable for the unlawful actions of their employees. We take a look at those decisions and list some of the practical ways that employers can prevent liability.

In the Old Mutual decision (SATAWU obo Finca v Old Mutual and Another (C198/2004) [2006] ZALC 51; [2006] 8 BLLR 737 (LC) (6 April 2006) the Labour Court was asked to determine whether Old Mutual was vicariously liable for the actions of an employee who had called a black employee a “kaffir”. Ostensibly the case concerned whether the employer had taken appropriate steps to prevent racist comments occurring at the workplace.

What is vicarious liability? As a general rule, an employer is vicariously liable for the wrongful act/s or omission/s of an employee committed within the course and scope of the said employee’s employment, or whilst the employee was engaged in any activity reasonably incidental to it.

With direct liability, the employer is liable because of its own acts and omissions. Vicarious liability is a derivative common-law claim that imposes liability on an employer usually because of the negligence of the employee.

The Labour Court was extremely critical of Old Mutual’s handling of the incident, noting that “the attitude adopted by management sent a message that employees who insulted their fellow employees in this way may expect a rap over the knuckles, and then only when dissatisfaction was expressed or a trade union becomes involved”. It found that both the employee (who had made the comment) and the company were guilty of racial discrimination.

It seems that the Court’s message was heeded by Old Mutual; actions taken after the decision provide an example of what steps all employers must take to avoid vicarious liability. Since the decision the Old Mutual has:

  • used the incident to emphasis to all employees that racism is unacceptable and will not be tolerated;
  • tightened disciplinary procedures to ensure anyone guilty of racism is dismissed; and
  • sought an assessment of its policies and procedures dealing with transformation, diversity and racism.

The Naspers decision (Media 24 Ltd and Another v Grobler (301/2004) [2005] ZASCA 64; [2005] 3 All SA 297 (SCA) (1 June 2005) did not deal with racism but an equally controversial issue at the workplace – sexual harassment. A female employee of Naspers (now known as Media 24) alleged that she had been sexually harassed by her superior over a period of five months.  She also claimed that the company were vicariously liable for the acts of her superior, as it had failed to:

  • deal with the employee’s allegations seriously;
  • take any action against the superior; and
  • protect the well-being of its employees.

The High Court (and later, the Supreme Court of Appeal) accepted the employee’s claim of sexual harassment against the superior and Naspers and she was awarded in excess of R700,000.00 damages. The lessons for employers emanating from this decision include:

  • a workplace policy (such as a sexual harassment policy) is not enough to protect an employer from liability for the acts of its employees – appropriate training and awareness campaigns are also required;
  • Courts are willing to extend vicarious liability not only to acts that happen within the workplace, but also to events that occur outside the working environment; and

when harassment issues are first raised, employers must take immediate steps to deal with the matter (particularly in relation to the alleged harasser) – it is not enough for employers to wait to see whether the complainant elects to use the formal grievance procedures.

Author:

Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

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