The Court of Appeal has confirmed that it is possible for both the seconding employer and host employer to have vicarious liability for the acts of a seconded employee. If the employee is so much a part of the work, business or organisation of both employers it may be just to make both employers liable for the employee's negligence.
In Natwest Markets plv v Bilta (UK) Ltd, two traders employed by RBS SEEL and seconded to RBS had allegedly facilitated a VAT trading fraud. The High Court had found that the traders were legally employed, paid and supervised by RBS SEEL (albeit their salaries were reimbursed by RBS); however, they also had the power and authority to commit RBS to trading contracts as agents for RBS, at all times had to operate within RBS's guidelines, restrictions and directions and the trading activity they were conducting was that of RBS. The High Court therefore considered that they were operating in both companies' spheres of operations and it was appropriate to find that both RBS and RBS SEEL were vicariously liable for the acts of the traders.
The Court of Appeal upheld that decision. On the facts, there was no basis for concluding that the traders' activities were solely part of RBS' business activities to the exclusion of that of RBS SEEL. The Court went on to note that "the circumstances in which such a complete shift from the actual employer to the organization to which the employee is loaned will arise, must be very rare" and that there is no recorded case where such a shift has been found. The question of vicarious liability is not determined by the terms of any agreement between the two employers under which they may have declared whose “servant” the employee was to be at any particular time. Although contractual provisions might apportion liability between them, the question of vicarious liability turns on all the circumstances and facts of the case.
Employers should bear this potential liability in mind when considering the terms of secondment agreements and insurance coverage.
For further details of the case, see the HSF Banking Litigation Notes post here.
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