Imagine inviting a complete stranger into your home. Not only do you invite him in, you also give him a key and unrestricted access to all the rooms in your house. You show him how to work your expensive TV, put alcohol in his room, and tell him to make himself at home. It sounds like a crazy scenario and one which most of us would never even contemplate. But it’s what tens of thousands of hotels around the world do every single day. Yes, hotel guests pay for the privilege of staying in your “home,” but there is still an awful lot of trust at work here.
It’s the same with employees. This is particularly true in the larger hotel chains, where recruitment takes place off-site, by the HR department at Head Office. Employees are simply sent you to and placed in positions of trust within your hotel. But what happens if one of your employees behaves inappropriately? Perhaps they take something belonging to a guest or make inappropriate comments or advances towards a guest or another employee. What recourse do you, as the employer have, when that guest or employee looks to you for compensation? This is why you need employee liability insurance.
It’s important to note that there is a difference between employee liability insurance and employer liability insurance. Employer liability insurance covers you against any claims made by an employee who is injured or becomes ill during the course of carrying out their work responsibilities. These claims could come in the form of compensation for medical expenses, pain and suffering, or loss of income, among others.
Employee liability insurance covers you against the wrongful actions – intentional or accidental – of your employees towards a guest or another employee. It protects you in instances where your employee damages someone else’s property or even causes death or serious injury during the course of carrying out their work. This includes instances of food poisoning, where a chef has undercooked meat, or used produce that wasn’t fresh.
Many employers argue that they shouldn’t be held responsible for the actions of another person, especially if those actions took place without the employer’s knowledge or consent. However, it is a well-known principle of South African law that an employer is “vicariously liable for the negligent act of his or her employee or agent when the employee or agent acts negligently while in the course and scope of his or her employment.”
The immediate questions arising from this, however, are: to what extent will the employer be held liable, and what exactly does “in the course and scope of his or her employment” mean? What happens, for example, if a company driver takes time out from his official errand to run a personal one, and during that time commits a negligent act? Can the employer still be held accountable?
Of course, even if vicarious liability is established, this doesn’t mean the employee gets off scot-free. The employer would be responsible for any claims made by the wronged third party, but he might still be able to recover some of those damages from the employee.
There are often grey areas in the course of proving vicarious liability, but the risk is always there. And risk is why we have insurance!
Even if you think your hotel’s comprehensive general liability insurance will cover you in all instances, it really is worth taking the time to read through your policy to make sure you have sufficient employee liability insurance. Don’t wait until you need to submit a claim before you realise you don’t have the right coverage.
When you contact CC&A Insurance, you know you’re dealing with insurance industry experts. With over 200 years of combined industry experience, we are perfectly positioned to provide you with honest advice, and custom make an affordable employee liability insurance policy to thoroughly protect your hospitality business. Your peace of mind is only a phone call away. Call us today.