Organisations (including companies, incorporated associations
and other trading entities) can be rendered liable in a number of
different ways for the conduct of their employees and contractors,
as well as other persons associated with the activities of the
organisation. If a person suffers injury or damage in the course of
the organisation's activities, the organisation will likely
find itself the target of allegations that it is responsible for
the conduct of the "associated person." As a result, it
is important for managers of organisations to understand the
potential sources of liability, identify the current level of risk
and to take all reasonable steps to manage that risk.
Identifying the Relationship The first step is to
identify what relationship currently exists between your
organisation and each associated person. In practice the
relationship is likely to fall into one of the following
Employment pursuant to a written contract of employment.
Employment pursuant to a verbal agreement or unspoken
Independent contractor pursuant to a written contract for the
provision of services.
Independent contractor pursuant to a verbal agreement or
Provision of services to the organisation via a third
Provision of services to third parties held at the
organisation's premises or at an event sponsored by the
It is important to remember that labels are not conclusive, as
the law looks to the substance of the relationship. Just because a
person is called a contractor does not mean this is correct.
Various factors may suggest that they are in reality an employee
and would be treated accordingly at law. More generally, a verbal
or unspoken arrangement gives rise to uncertainty that is not in
the interests of your organisation. Once you have identified the
relationship, you will be in a much better position to appreciate
the options available to your organisation to better manage the
risks posed by the conduct of the association person. It may even
change your organisation's perspective more generally as to the
terms upon which it engages services, or how it allows those
services to be provided by third parties or at your
organisation's premises or sponsored events.
Understanding the Sources of Liability and Risk As
a rule of thumb, the greater the ability of the organisation to
exert control, the more likely it is that the organisation will be
held responsible to some extent for the conduct of an associated
person. However, the level of control available to an organisation
is not entirely a matter that can be dictated by the organisation.
Even where an organisation has lawfully sought to limit its level
of control, an organisation might still be held responsible
depending upon its statutory obligations, the context of the
relationship and the circumstances of the incident. The potential
sources of liability on the part of an organisation for the conduct
of its associated people are numerous but include:
Damages for breach of a duty of care owed either directly to
third parties by the organisation or vicariously through the
actions of the associated person.
Damages for breach of contractual obligations owed to a third
Prosecution for contravention of the Working with Children
(Criminal Record Checking) Act 2004.
Prosecution for contravention of the Occupation Safety and
Health Act 1984.
As you can see, the conduct of associated people can give rise
to civil and even criminal liability on the part of an
organisation. This demonstrates how important it is for you to
ensure that your organisation's relationships with its
associated people are managed appropriately, with a view to
providing a safe environment for the conduct of your
organisation's activities and limiting the risk of liability
arising from unsafe practices. Managing the Risk
Identifying the nature of your organisation's relationships
with its associated people and recognising the organisation's
potential liability for their conduct is crucial to developing
appropriate strategies to manage that risk. Kott Gunning Lawyers
can provide a basic health check for your organisation by:
Reviewing the organisation's relationships with its
Providing a checklist of issues that could affect the
Providing recommendations on how to better protect the
organisation from the risk of liability, as well as an estimate of
legal costs for implementing those recommendations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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