"The English law on vicarious liability is the best compromise which could have been reached between the needs of tort victims for compensation and the freedom of businesses to operate without excessive burdens."

 Vicarious liability is incident only to a relationship of controlled employment, traditionally described as that of ‘master and servant’. This means that for the employer to be vicariously liable the employee must be in controlled employment, not an independent contractor and be acting in the ‘course’ of this employment. The principle of vicarious liability is very controversial as it is quite broad, and the fact that personal fault on behalf of the employer is not required means that it is sometimes more difficult to attribute blame on big companies or corporations than individuals.

 However, there are many aspects of vicarious liability that make it suitable for its use. In nearly every case the employer is in the best position financially to compensate a claimant as they always have the ‘deepest pocket’. The whole purpose of the law of tort is to compensate the victims, the resources in question that enable the employer to have the ‘deepest pocket is provided through insurance. Many employees are not worth suing, therefore without the insurance industry the present tort system could not operate.

 Vicarious liability forces the employer to continually strive for accident prevention. If every employee was insured individually it is unlikely that the employer would take such a keen interest as there is no direct liability. Employers generally therefore assess the suitability of the staff, give them adequate training and dismiss any that are unreasonably risky to reduce the risk of any torts occurring.

 Another argument that justifies the existence of vicarious liability is the fact that as the employers reap the profits from the work of the employees, they should bear the responsibilities if anything goes wrong. This is a rather weak argument based on fairness but is associated with a far more convincing point that vicarious liability also serves as a ‘loss distribution mechanism’.QUOTE-FLEMING In economic terms this means that compensation claims should be regarded as a ‘cost’ of producing goods. The employer is able to insure against these ‘costs’ and then recover the cost of insurance through higher prices. In effect this means that the customer actually pays for the risks created as a by-product of production making the process effiecient in terms of the price of the product reflecting the social cost.footnote?.

These points demonstrate that vicarious liability is a suitable mechanism to protect the needs of the tort victims without being too restrictive upon business practice. However, it is argued that while the principle adequately compensates the tort victims, it does indeed place too much of a burden upon employers.

 The case of Lister and Others v. Hesley Hall Limited demonstrates the view that employers can now be liable for the actions of their employees even when they are not directly performing the actions that they are employed to do. The issue centred around a school boarding house where the warden sexually abused the boys living there. There were no complaints at the time but in the early 1990’s when the boys had left they brought a complaint that led to the warden being imprisoned for 7 years. The boys later brought a claim for personal injury against the employers of the warden, the employers being the most realistic opportunity to gain compensation. Lord Steyn identified with the most common argument against the validity of the principle of vicarious liability when he described the position as ‘a compromise between two conflicting policies: on the one end, the social interest in furnishing an innocent tort victim with recourse against a financially responsible defendant; on the other, a hesitation to foist any undue burden on business enterprise’.On this basis it is argued that the needs of the tort victim and the freedom of businesses to operate without undeue burdens are conceptually distinct, but the principle of vicarious liability makes the best of a bad situation.. It was decided in the Lister case that the sexual abuse was ‘inextricably woven’ into the duties of the warden. However, the decision has resulted in the business sector taking on an undue burden as employers are now liable for their employees when the activity is only ‘closely connected’ and not ‘directly’ involved with what they are employed to do, it is argued that the liability of employers is now too broad.

 Another problem with the principle of vicarious liability is that it places an undue burden on the employer where the employee’s job involves an element of risk. In the Police force the Police Act 1996 makes the Chief Officer vicariously liable for the conduct of the Constables under his control. It is obvious that the pressure this instills will restrict the police from fully performing their duties as the threat of civil action could cause defensive policing and other associated problems.

In conclusion, the needs of the tort victims generally places a burden on the freedom of business operation as this cost needs to be factored in the cost of production. The measures taken by employers such as extra training to combat the occurrence of accidents for example takes up time and costs money, which distracts from their primary purpose which is usually to make money; this in itself is a burden.

 The public sector is also hampered by the threat of civil action as health authorities are liable for the NHS staff and the Chief Officer of police is liable for their constables. The objective of these areas of the public sector is to provide a service, but the quality of this service could theoretically be hindered if the threat of civil action is present when people are simply performing their duties.

 However, the principle of vicarious liability is generally a beneficial mechanism that adequately compensates the tort victim without placing an undue burden on the business sector. There is undoubtedly a burden, but not an undue burden; employers in many cases have successfully incorporated this burden into a cost of production that consumers effectively pay for, and in any case the insurance premium that covers the claim is generally cheaper than if the employer was to directly compensate the tort victim. Therefore, the principle of vicarious liability is the best compromise which could have been reached between the needs of tort victims for compensation and the freedom of businesses to operate without excessive burdens.