March 7, 2016
When acting for an employer we are often asked whether an employee can be sued for damages that the employer sustains as a result of an employee’s negligence. The answer is no. A case recently decided by the Alberta Court of Queen’s Bench, Shamac Country Inns Ltd. v. Sandy’s Oilfield Hauling Ltd., does not purport to change the law in that area. However, the law does bear repeating, as we often see claims being advanced against employees by their employers for damages allegedly sustained as a result of the employee’s negligence.
Employees are not liable to their employers for acts of simple negligence. Recent authority for this proposition was cited by the Alberta Court referencing Douglas v. Kinger, 2008 ONCA 452, Kirby v. Amalgamated Income Ltd. Partnership, 2009 BSCC 1044 and 1746646 Alberta Inc. v. Aman Carrier Ltd., 2014 ABPC 270. Employees may be liable for intentional or reckless actions where:
- They are “skilled” workers, and are held to a reasonable standard of care associated with their roles. This will arise in a case such as a CPA performing duties as an accounting professional. However, as a result of the power imbalance inherent in the employment relationship, the employers generally bear the onus to establish the employee is a “skilled worker” which is a high threshold test;
- They act fraudulently or commit acts of intentional wrongdoing beyond the scope of their authority; and
- Those employees who are directors and officers are held to the standard of reasonable business judgment in exercise of their discretion and can be liable where their actions fall below that standard.
The recent decision of Shamac considered whether a company could bring an action against a related company and its employee for negligence in causing a fire. The Plaintiff attempted to shift liability for the damages caused by a fire at its premises upon a related company and its employee. The Court considered whether the defendant employer was vicariously liable for the actions of the employee, as well as whether in fact the plaintiff was a common employer to the employee against which it now sought to attach its claim. The Court drew upon the principal of a “borrowed employee” suggesting that although the relationship may not have been a true employment relationship, it was one like a “transferred employment” relationship where the control lay with the plaintiff who was seeking to sue the employee for the employee’s negligence. The Court concluded that whether one looked to the doctrine of common employer, or the concept of ‘borrowed employee’, the considerations were similar, and the question to be decided was: “who was the employer who exercised control over the employee”.
The Court applied the common employer doctrine even though the case was one of vicarious liability and not wrongful dismissal, and held that the doctrine did apply. The Court concluded that the plaintiff and the corporate defendant collectively employed the employee. Accordingly, the Court went on to conclude that the plaintiff employer could not bring an action against the defendant employee for negligence, and that the employee was not liable for the causing of the fire forming the subject matter of the litigation.
While employees are not always liable for the consequences of their negligence, it bears mention that negligence may be grounds for termination of employment for cause.
Shamac Country Inns Ltd. v. Sandy’s Oilfield Hauling Ltd., 2015 ABQB 518, 2016