Aparna Sojan

Employers should be held vicariously liable for sexual harassments that are engendered by employment.

On 30th January 2020, a judgment delivered by EWHC was lauded for advancing the jurisprudence surrounding employers’ vicarious liability in sexual harassment cases. This piece attempts to understand the extent to which Indian law has embraced the concept of holding employers vicariously liable for sexual assaults committed by its employees.

Vicarious Liability

Vicarious liability refers to the liability cast on the employer for the torts committed by his employee during the course of employment. The existence of an employer-employee relationship and commission of the tort by employee while acting under the course of employment are the two essential pre-requisites to establish vicarious liability. There are various bases on which the theory of vicarious liability is justified. It is regarded as an effective mechanism as it facilitates access to the “deep pockets” of an enterprise and thereby ensures that victims are not deprived of the compensation to which they are entitled. Another theory perceives the objective of the doctrine as “loss distribution” whereby those who benefit from the enterprise that gives rise to the cause of action is made liable for bearing the resultant losses. Hence, essentially, it is rooted in public policy.

International scenario

The vicarious liability of an employer for sexual assault committed by his employee is often not recognised as such acts are considered to be ‘personally motivated’ and hence, outside the scope of employment. However, in some jurisdictions such as the US, Australia, Canada and UK, Courts have been increasingly holding employers vicariously liable for sexual assaults committed by their employees.

Determination of whether an act falls “within the scope of employment” is the crucial factor for determining an employer’s vicarious liability. Bazley v. Curry is one of the earliest Common Law decisions which established vicarious liability for sexual misconduct. In holding a non-profit organisation vicariously liable for the acts of an employee who sexually abused children, the Court propounded that the test in such cases is whether the employment with the enterprise has “materially increased the risk of sexual assault.” The subsequent judgment in Lister v. Hesley Hall established the test of enquiring whether an employee’s acts are “so closely connected with his employment” to hold the employer vicariously liable.

The most effective and apposite formulation of the test is perhaps that of the Oregon Supreme Court in Fearing v. Butcher. In this case, the Archdiocese which was supervising a priest who was found guilty of sexually assaulting a child was held vicariously liable. One of the major contentions that were raised before the Court was how upholding vicarious liability in sexual assaults solely because employer provided an ‘opportunity’ to commit assaults would effectively act against all employers. Invariably, all employers could then be held liable for the sexual assaults committed by their employees for having provided an “opportunity to be alone” with the victim. This is exactly why most of the jurisdictions seem to be reluctant in holding employers of perpetrators vicariously liable for sexual assaults that they commit. The Court resolved this dilemma by rendering some remarkable observations. The Court did not hold the Archdiocese liable merely because it facilitated the meeting of the perpetrator and the victim. It was so held because the priest had “used and manipulated his fiduciary position” to ultimately gain access to the victim and thereby sexually assault the child. The employment was considered a “necessary precursor” to the tort and the sexual assaults were found to be a “direct outgrowth of and engendered by conduct that was within the scope of employment.”

The argument that an employer would rarely authorise the commission of a sexual assault has its own merit. However, the ‘engendered by employment’ test in Fearing establishes liability of an employer only for those sexual assaults of an employee which can be attributed to conditions created by the work environment. For instance, in a sexual assault with an underlying motive of forcing a woman to resign from her job, the commission of wrongful acts preceding the actual assault are possible and facilitated by the employment relationship between the tortfeasor and the victim. Hence, what the test envisages is more than an employer’s facilitation of an opportunity to for interaction between perpetrator and victim of a sexual assault. Rather than looking into whether the sexual assault in itself was an act within the scope of employment, Fearing requires us to analyse whether the acts that led up to sexual assault were resultant of the employment relationship persisting between the tortfeasor and the victim.

Indian jurisprudence

There is no cogent authority on what forms the theoretical basis for vicarious liability in India. Nonetheless, the close connection test laid down in Lister has been quoted with approval by the Allahabad High Court as well as the Chhattisgarh High Court albeit in different contexts.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (hereinafter, the “Act”) needs to be perused in order to appreciate the developments in India. The Act does provide comprehensive definitions of who an employer and employee are and what conduct amounts to sexual harassment. However, on a bare perusal of the Act, one cannot see any vicarious liability cast on an employer if an employee is found to be guilty of sexually harassing another employee in their workplace.

It is pertinent to look at Section 19 of the Act which enlists the duties of every employer under the Act. Particularly, clause (a) of the Section obliges an employer to “provide a safe working environment at the workplace”, which includes “safety from the persons coming into contact at the workplace.” If an employer fails to adhere to any of the mandates prescribed by the Act, he is punishable with fine which may extend upto ₹50,000 as per Section 26.

In M/s ISG Novasoft Technologies Ltd. v. Gayathri Balaswamy, the respondent had filed complaints of sexual harassment against the CEO and Vice President of the appellant company. Notably, one of the contentions raised by the appellants was that in the case of an employee harassing his co-worker, the only remedy was against the offending employee and not against the employer. It was argued that there would be no question of vicarious liability of an employer in such a case unless the offender had sexually harassed her while discharging his duties and the employer had authorised this. The Division Bench of Madras High Court upheld the ruling of the Single Judge and rendered that ruling out vicarious liability of an employer would be contrary to the public policy prevailing in India. The Court found that employer’s failure to constitute an Internal Complaints Committee made him vicariously liable. Further, it was also ruled that if there was no vicarious liability, then the redressal mechanism envisaged by the Act would be futile as a “victim can always be directed to take recourse individually against the offending employee.”

What emerges from the decision is that the Act impliedly envisages vicarious liability of an employer if he fails to adhere to the requirements prescribed by the Act. In this case, there was a clear case of violation of the Act as failure to constitute ICC renders an employer liable for penal consequences. However, what ISG Novasoft has thrown open is the possibility of an employee who is a victim of sexual harassment arraying the employer as a respondent in the litigation on the grounds that the employer has materially increased the possibility of her being sexually harassed.

Way forward

Section 26 of the Act imposes a penalty on the employer for failure to adhere to any of its provisions. According to Section 19 (a), provision of a ‘safe working environment’ is an employer’s obligation. Hence, a conjoint reading of both of these Sections indicates that a woman employee can maintain an action against the employer if another employee sexually harasses her on the ground that the employer has failed to provide a safe working environment. This makes it evident that the Act does not envisage a mechanism where the employer is to be absolved for an act such as sexual harassment which is an intentional tort or something which is often considered as ‘personally motivated.’ On the contrary, there is a statutory obligation on the part of the employer to ensure that an employee is safe in her workplace.

One cannot undermine the authority or power that an employment confers on a tortfeasor while evaluating whether the tort committed was within the scope of employment or not. Other jurisdictions have taken cognisance of this and have been upholding the vicarious liability of employers when there is a misuse of authority by an employee in order to indulge in sexual harassment. Thus, it is time for us to acknowledge the vicarious liability of employers when an employee’s conduct that results in sexual assault is engendered by employment. It is without doubt that an evaluation of the extent to which each such tortious conduct was engendered by employment would require a factual analysis of each case. Nevertheless, holding employers vicariously liable in cases where sexual harassment can be attributed to employment- related events will only usher in an era of increased accountability and monitoring of work environment which would, in the long run, aid in bringing down instances of sexual harassment at workplace.

The Author is a penultimate year law student at NUALS Kochi.

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