The distinction between employees and independent contractors is replete with grey areas but could hardly be more important. The Supreme Court gave authoritative guidance on the issue in ruling on the

case of numerous bank workers who claimed to have been sexually assaulted by a doctor during pre-employment health checks.

Canary WharfAt the bank’s behest, the self-employed doctor carried out medical assessments of prospective employees. The bank arranged the appointments and paid him a fee for each confidential report that he prepared. He did not receive a retainer and carried out the unchaperoned examinations in a consulting room at his home.

No fewer than 126 alleged victims who were examined by the doctor claimed that he had sexually molested them. They launched damages claims against the bank, arguing that it bore indirect, or vicarious, liability for the doctor’s misconduct. The doctor himself had been dead for some years. A judge found that the bank’s vicarious liability had been established and that ruling was subsequently upheld by the Court of Appeal.

In upholding the bank’s challenge to the latter ruling, the Supreme Court noted that, in order for one person to be held indirectly liable for the wrongdoing of another, there must be a sufficiently proximate relationship between them so as to render it proper for one to pay for the fault of the other. The relationship between employer and employee has historically been viewed as passing that test.

The doctor was not a bank employee and operated as an independent contractor, but the alleged victims argued that his relationship with the bank was nevertheless akin or analogous to employment and that it would be fair, just and reasonable to hold the bank vicariously liable for his alleged unlawful acts.

The Court, however, found that the doctor was not at any time even close to being an employee of the bank. He was in business as a medical practitioner on his own account and, although the bank arranged the examinations and chose the questions it wanted answered, it was merely one of his clients. Their relationship was no closer to employment than that between a company and an auditor, or a householder and a window cleaner.

No doubt carrying his own medical liability insurance, the doctor was not obliged to accept a certain number of referrals from the bank and was free to refuse to conduct a requested examination. The Court concluded that the bank was not vicariously liable for any assaults that the doctor might be proved to have perpetrated.

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