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Strict/Vicarious Liability


Under strict/vicarious liability an employer can be held liable for the actions of their employees even if the employee engages in criminal or fraudulent behaviour (Smit & Viviers, 2016). In Australia, liability can arise under contract law, tort, criminal law or other statutes (Ryding & Reisz, 2016). I do agree that making employers liable for their employee’s actions is a great motivation to minimise fraud, bribery and corruption; however, I disagree that it is the only solution. The backhand in a workplace could be that an employer withholds information that might lead to the conviction of an employee in the fear that they will become equally convicted initiating another area of fraud.

The Royal Commission produced a report into misconduct in the banking, superannuation and financial services industry that identified types of crime. Vendor fraud was a main issue of the report due to banks charging fees for services that were not provided (Hayne, 2017). Vicarious liability would aid in the ability to pin-point an individual or group responsible for the issue as they were likely aware of their actions, however this action could be one coming from high power where the employees had no control. Poor investment advice given to clients was another main issue of the report indicating an area of investment fraud (Hayne, 2017). This issue could be addressed with strict liability as the employees may not have been fully aware of the effects of their investment decisions but should be held liable. Vicarious and strict liability aids in preventing fraudulent behaviour however there are possible ways around liability so should not be the sole motivation.


References


Smit, D. M., & Viviers, M. D. (2016). “Vicarious” liability of the employer in sexual harassment cases: A comparative study. Journal of Business, 1(1), 41-59.

Hayne, K. M. (2017). Royal Commission into Misconduct in the Banking, Superannuation and 
Financial Services Industry. Canberra: Commonwealth of Australia.
Ryding, A., & Reisz, L. (2016, October 9). Australia: The High Court clarifies the law regarding employers' vicarious liability for an employee's wrongful acts. Retrieved from Colin Biggers & PaisleyLawyers: http://www.mondaq.com/australia/x/533772/Health+Safety/The+High+Court+clarifies+the+law+regarding+employers+vicarious+liability+for+an+employees+wrongful+acts

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