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Sometimes an employee causes damage while they are performing their duties. This guide discusses the liability of an employer to pay for that damage.
Vicarious liability is, in the employment context, the liability of an employer for the damages its
employee causes in the course of the employee’s employment with the employer.
Vicarious liability is based on an implied term of employment that the employer will indemnify
its employee against loss arising out of the employment relationship; the implied duty of the
employee in return is that he or she will exercise due care in the performance of the
There is provision under the Employment Relations Act 2000 for both employers and
employees to enforce their respective rights in respect of indemnification.
The Employment Relations Act 2000 provides that employers will be vicariously liable for the
actions of their employees in the context of sexual and racial harassment if the employer has
received a complaint of harassment and has not taken whatever steps are practicable to
prevent its repetition.
The Human Rights Act 1993 provides that employers will be vicariously liable for the actions of
their employees in the context of sexual and racial harassment if the employer cannot prove
that it took such steps as were reasonably practicable to prevent the harassment complained
It may be appropriate in some circumstances to express the obligation of an employee to
indemnify its employer in their employment agreement.
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