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The man on the door: contracting out the risk?
Risk is a part of life. Whatever your business, there are bound to be hazards that could confront it around almost every corner.
Some risks, of course, aren't apparent until they occur. Others, however, are known quantities that responsible employers identify, and act to minimise.
Possibly one of the most obvious illustrations of the acknowledgement - and management - of risk is represented by a sight that most of us will have seen outside any popular establishment on a Friday night: the bouncer.
The bar's risk is ever present - namely, the prospect of an unwelcome and unruly patron. The bouncer's task is to manage that risk - by removing unwanted punters, and by seeking to eliminate risk by preventing them entry in the first place.
But, if a recent decision of the English Court of Appeal is anything to go by, the bouncer may actually be a risk himself (or herself).
The applicant in Hawley v Luminar Leisure Limited [2006] EWCA Civ 18 (24 January 2006) was a man who had attempted to enter a bar owned by the respondent, called Chicago Rock Café, located in Southend, England. A bouncer at the door of the establishment denied Hawley entry and punched him - so hard that he fell to the ground and fractured his skull, causing brain damage. The bouncer was subsequently convicted of causing grievous bodily harm, and was separately punished.
For his part, Hawley sought to claim compensation for his injury. And in the course of that claim, a difficult issue arose about liability for his loss.
It transpired that the bouncer was not employed by the owners of the bar, but rather by a security company which had entered into a commercial arrangement with the bar. The security company had, amongst other things, guaranteed that it would supply bouncers with sufficient qualifications and experience to perform the role required by the bar.
It was contemplated that the bar manager - who was employed by its owners - would, as required, simply tell the bouncers what was required of them in the course of a particular night (ie "throw that guy out, please!").
Put simply, the owners of the bar said that they were not responsible for the heinous act of the bouncer - because he was employed by a different company - and the bar's relationship with the security company was purely by way of a commercial contract.
To the contrary, Hawley argued that, as a matter of reality, the bouncer might as well have been an employee of the bar and, on that basis, the owners of the bar should be liable for his acts.
One can probably have sympathy for both sides of this argument. On the one hand, there is little doubt that the owners of the bar sought to limit their exposure to exactly this type of liability by entering into a contractual arrangement with a separate company - surely, that security company should properly be held to account for the actions of the bouncer? On the other hand, of course, one can readily appreciate that from Hawley's perspective, the bouncer appeared to be a representative of the bar - and that organisation should be held liable for his injuries.
The Court of Appeal found in favour of Hawley. It said that, as a matter of practicality, the bouncer had become a "temporary deemed employee" of the bar. Put simply, even though the strict contractual arrangement did not give rise to any employment relationship, all of the relevant circumstances suggested that there was one. For example, the Court noted that the bouncer wore the bar's uniform, and that he was directed about his tasks by the bar's manager. He was not, in any practical sense, an independent businessman, operating separate to the bar's business.
Accordingly, the Court allowed Hawley to bring his claim against the bar (or, more particularly, its insurers).
Claims for personal injury may not be brought in this country - because our accident compensation legislation bars them. A case like this would not, therefore, be decided here.
But the principles at the heart of this decision are applicable in New Zealand.
Specifically, the Employment Relations Authority is entitled to consider the practical reality of any workplace situation to determine whether or not it constitutes a relationship of employment. There is little doubt that by applying a similar rationale, the Authority - or Employment Court - would be highly likely to reach the same conclusions achieved by the Court of Appeal in this case - namely, that the real nature of this bouncer's relationship was one of employment.
In other words, a Court in this country may similarly challenge the commercial arrangements that an employer might otherwise have felt confident insulated it from liability.
