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Employee Liability Overview

Stephen Curtain

Employment relationships are fundamental in our society and our laws dealing with those relationships are as advanced as anywhere, covering areas such as health and safety, negligence, bullying, discrimination, harassment and victimisation, misleading and deceptive conduct, breach of confidential information and intellectual property rights and misuse of position or information obtained by reason of holding a position.

It is well known that employers can be held liable for the acts and omissions of employees, and while most employees are mindful of their duties, it is worth remembering that employees also have a responsibility in this area and can be held personally liable themselves, with considerable consequences for failure to fulfill that responsibility.

Health and safety

According to the Australian Bureau of Statistics, of the 12 million people who had worked at some time in the 12 months to June 2010, 640,700 people, 5.3% experienced a work-related injury or illness in that period.

All employees have a general duty of care to ensure that they work in a manner that is not harmful to their own health and safety, and the health and safety of others. Employees must not only not wilfully put the health and safety of others at risk by, for example, recklessly interfering with or misusing safety equipment, but they must also take reasonable care for their own health and safety and that of fellow employees and contractors. This involves doing such things as following safety guidelines and systems of work in accordance with training and instructions, and generally working with the employer to make the workplace safer by reporting potential hazards or personal physical issues in the workplace. The new Model Work Health and Safety Act does not effectively change these duties.

Failure to fulfill these obligations can result in the employee and/or the employer being held liable with serious consequences, including criminal convictions and severe penalties in the event of gross breach resulting in death or serious injury. For example,  the driver of a truck involved in a collision in Melbourne’s Burnley Tunnel that killed three people was subsequently found guilty of three counts of dangerous driving causing death and ordered to serve a maximum of five years with a minimum two years and nine months’ jail before being eligible for parole. The driver’s licence was also cancelled and he was disqualified from obtaining another until 18 months after his release from jail. The Judge noted that if the accident had happened after March 2008, when the maximum penalty for dangerous driving causing death was doubled from five to 10 years, the driver would have received a much heavier sentence.

Negligence

Whilst employers are generally jointly liable with the employee for an employee’s negligent acts or omissions, employers are not responsible for every such negligent act or omission. Where the apparently negligent act amounts to serious and wilful misconduct, or did not occur in the course of, the employment, the employer will not be liable and the employee must accept sole liability for the consequences. Thus, employers may not be liable for assaults in the workplace, which will generally constitute serious and wilful misconduct by the employee concerned. And employees whose wrongful acts are not really related to their employment may have to pay for the consequences alone. 

Bullying

The occupational health and safety (“OHS”) law extends to bullying in the workplace, for which both the employee and the employer can be liable with dire consequences. In a recent case in Melbourne involving the suicide of a young waitress, Brodie Panlock, due to bullying she was subjected to at work at a restaurant, the manager and two employees were convicted and fined $45,000 and $30,000 and $10,000 respectively, under section 25(1)(b) of the OHS Act for failing to take reasonable care for the health and safety of fellow employees affected by their actions. The employer was also convicted and fined and the business so badly damaged by the publicity it attracted that it was forced to close.

Discrimination, harassment and victimisation

The Equal Opportunity Act 1995 (Vic) prohibits sexual harassment, discrimination and victimisation in the workplace. Again, both employers and employees can be liable for offending these laws. And employees should be mindful that they can be personally liable not only for the most obvious acts of harassment, discrimination and victimisation, but also for the more subtle ways in which they can engage in these activities such as displaying screensavers depicting offensive or harassing material to other employees. The informal email to a mate or co-worker containing an ‘inoffensive’ joke or the defamatory comment sent without regard to the consequences may be offensive to the recipient or someone they send it to with the employee’s name on it, with significant consequences for the employee. Similarly, misuse of the email and Internet system by employees storing, sending or receiving sexually explicit, offensive or discriminatory material may expose an employee to prosecution for breach of anti-discrimination legislation as well as loss of job.

Misleading and deceptive conduct

Section 18 of schedule 2 of the Competition and Consumer Act 2010, which forms part of the Australian Consumer Law, mirrors the old Trade Practices Act and prohibits a corporation engaging in misleading and deceptive conduct. Section 236 also provides that a person ‘involved in a contravention’ of these laws may be liable. This can include employees and others as the Act defines a person involved in contravention generally as one who aided, abetted, counselled or procured the contravention; induced, whether by threats or promises or otherwise, the contravention; or was in any way, directly or indirectly, knowingly concerned in, or party to the contravention, or conspired with others to effect the contravention.

In the 2006 case of Houghton v Arms, which concerned employees who conveyed misleading information in the course of their employment, the High Court unanimously ruled that employees who are not necessarily directors or officers of a company may be liable for misleading or deceptive conduct, even though they are not personally tainted with any knowledge of the company’s wrongdoing. And it said that it was immaterial to the liability of the employees whether the employer was also liable.

Confidential information and Intellectual property

These matters are often dealt with in employment contracts, but employees have obligations at common law, regardless of contractual terms, which are designed to protect the employer’s ownership of its less tangible property such as the identity of suppliers and customers and the prices charged by and to them, budgets and sales plans and forecasts, copyright obligations and the like, as distinct from the company’s physical property such as tools and uniforms and plant and equipment. Employees may not keep or copy such information without the employer’s consent and must return them on conclusion of their employment at the risk of having to meet a claim for injunction and damages.

Statutory liability

Employees can be liable for civil penalties and fines for breaches of the Corporations Act 2001. The relevant sections are designed to prevent employees, and others, using their position or information obtained by reason of their special position to the detriment of the corporate employer or to the employee’s advantage.

Section 182 prohibits employees improperly using their position to gain an advantage for themselves or someone else or to cause detriment to the corporation.

Section 183 prohibits employees, directors and officers who obtain information because they are, or have been, employees directors or officers of a corporation from improperly using the information to gain an advantage for themselves or someone else or to cause detriment to the corporation. This prohibition continues to apply after the person leaves the company and is relevant, for example, in situations where an employee uses company confidential information as to such things as prices of goods or services after leaving the employment. The section also applies to non- employees involved in such breaches including, for example, the employee’s new employer or business partner.

Under section 184(2) a director, other officer or employee commits an offence if they use their position or information obtained by reason of their position dishonestly:

(a)   with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or

(b)   recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.

Conclusion

It follows from the above that while the law prescribes that employers have responsibilities for the actions of their employees, it is not all actions for which they are responsible and employees have their own responsibilities and liabilities which are not necessarily protected, the breach of which can have considerable consequences.