In this article we take a look at two recent employment law cases, one which deals with “vicarious liability” (when an employer is liable for the actions of its employees) and one which deals with whether an employer should be taken to have implicitly authorised the performance of overtime.
Vicarious liability – When will an employer be responsible for the act of their employees?
In this recent case the High Court was tasked with determining an often misunderstood area of employment law, vicarious liability. Vicarious liability is a legal rule whereby employers can be held to be legally responsible for the acts of their employees. The common law rule in Australia is that the wrongful acts of the employee must be done in the course or scope of employment for vicarious liability to arise. This extends to both authorised and unauthorised acts so long as the act is sufficiently connected to the employment and the employee is not on a “frolic of [their] own”.
In this matter the court was required to determine whether an employer was vicariously liable for the tortious acts of an employee committed in accommodation provided to staff by their employer as part of their employment. Mr Schokman brought a claim against CCIG Investments Pty Ltd after he suffered a cataplectic attack as a result of an incident that occurred in shared staff accommodation after his roomate had returned to their shared accommodation intoxicated and urinated on Mr Schokman whilst the roommate was sleepwalking.
In finding that the employer was not responsible for the acts of the employee the High Court emphasised that the employment needed to provide more than the mere opportunity for the act to occur for the employer to be vicarious liable, the act needed to have a sufficient connection to the employee’s employment.
Implied approval of overtime
This recent Federal Court case was a representative proceeding (commonly known as a class action) against Peninsula Health for unpaid wages for junior doctors known as “Doctors in Training” as they were classified under their relevant multi-employer enterprise agreements. The relevant agreements provided that overtime was only payable to employees when they worked rostered hours in excess of their ordinary hours or authorised hours in excess of their rostered hours.
The central issue in these proceedings was whether overtime that was worked and performed by the Doctors in Training was capable of being “authorised overtime” when the authorisation was given by Peninsula Health impliedly and not expressly.
It was the Applicant’s case that at various times between January 2019 and January 2021, she worked hours in excess of her rostered hours in order to: prepare for ward rounds; undertake ward rounds; prepare patients for medical procedures; undertake handover; and complete medical records. The Applicant contended that the overtime work performed by her was, on each occasion, performed with the authority of Peninsula Health and this engaged the obligation imposed upon Peninsula Health under the enterprise agreement to pay for the overtime work performed at overtime rates of pay.
The Respondent had argued that “authorised” should be given its grammatical meaning “to give authority or legal power to; empower (to do something); to give authority for; formally sanction (an act or proceeding)”. It was their submission that Peninsula Health had detailed and prescriptive processes for the authorisation of overtime as set down in the Policy and Guidelines that were provided to the Doctors in Training and that these processes were the only manner in which overtime could be authorised. As the overtime had not been authorised in accordance with these processes, it should not be paid.
This interpretation was rejected by the court as they said it could lead to “absurd results and very significant unfairness” and alternatively the court found in favour of a much broader interpretation of how overtime could be authorised.
Ultimately the court decided that an authorisation to work overtime, in excess of rostered hours, could be given impliedly and that the enterprise agreements did not limit the ways in which unrostered overtime could be authorised. In finding this the court stated: “It follows that an authorisation, in the form of a request or a requirement made by the employer to the Doctor that the Doctor work in excess of his or her rostered hours, would suffice to designate the time worked by the employee as “authorised hours”.”
The case is a useful reminder to employers of the need to monitor the hours its employees work. If an employee is working additional hours with the knowledge of the employer, it may well be difficult for an employer to argue that such hours were not authorised by the employer. This could lead to a liability to pay the employee for the additional hours worked, and potentially at overtime rates.
Employers are advised to review their contractual arrangements to ensure that these are clear as to whether employees’ salaries and wages are designed to cover all hours worked (even additional hours). Employers should also have policies in place which contain clear rules about when overtime is permitted to be worked.
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