• Employer’s, Employee’s Liability to Consumers
  • October 22, 2012
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • An employee of a supplier can be held liable to a third party for the harm caused to the consumer due to the employee’s conduct that is prohibited by the Consumer Protection Act. This is over and above any labour law remedies or sanctions that the employer (supplier) may have against the guilty employee.

    One of the reputable companies that supply truck replacement parts and provides a maintenance service to trucks in the Gauteng region of South Africa recently reported two incidents where its employees had neglected to tighten the nuts after performing a wheel alignment service on two trucks on two separate occasions. In one of the incidents this defective workmanship led to a road accident that caused damage to two vehicles although there were no fatalities. Worse could have happened in a country with an already alarmingly high rate of road deaths.

    Section 113 of the CPA states that if an employee or agent of the supplier is liable in terms of the act for anything done or omitted in the course of that person’s employment or activities on behalf of their principal, the employer or principal is jointly and severally liable with that person. The section does not apply to criminal liability. This is an important codification of the common law in that both the supplier and its employees can carry equal responsibility for harm suffered by the consumer of the supplier due to the conduct of the employee. According to section 61 a supplier of any goods or services is liable for any harm caused wholly or partly as a result of supplying any unsafe goods, a product failure, defect or hazard in any goods, or inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from the use of any goods, irrespective of whether the harm resulted from any negligence on the part of the producer, importer or retailer, distributor etc. The harm that the supplier and/or its employees can be liable for includes physical and consequential harm or loss and any expenses incurred as a result. Liability is imposed irrespective of whether the party is responsible or transaction executed under the act.

    The logical and most responsible question that every supplier is well-advised to consider is the following: “How do you use your employees to comply with your Consumer Protection Act obligations?”, “How do you protect your business and its employees from liability towards the consumer?” The employer needs to implement training programs that are specific to the norms and practices of the industry to which the supplier belongs. These training programs should empower the employees to deal with the business of handling consumer issues, including how to impart information, how to give warnings and instructions to the customer and fair and efficient procedures to be followed from the time that a complaint is received. Suppliers could also consider amending the employment contracts of their employees with the view of also including obligations in terms of the Act. More can be done depending on the specific industry. More importantly the culture of the organisation and the relationship that it has with its employees and customers can play a major role in reducing the liability of the supplier. The guidelines established by the act for the development of industry specific codes encourage the formation of an industry ombud to resolve disputes between the parties as an alternative dispute resolution mechanism. Where an employee has caused harm to the consumer, the employer can either discipline the employee for misconduct due to negligence or incapacity. The employer can also elect to send the particular employee or employees for training internally or externally to improve their skills and to reduce liability. Besides the added benefit of having well-trained and capable employees that grow the business, the benefit of training is that the employer will receive certain points or merits for example on the BBBEE scorecard for skills development, depending on the classification of the employee.

    The course of action to be taken by the supplier will depend on the specific circumstances of the conduct of its employee, including whether the employee has previously received training in the particular aspect of the supplier’s business, whether the had an obligation in terms of the employee’s employment contract to behave or omit to behave in a particular fashion in relation to the customer whether under the listed responsibilities or ancillary responsibilities, whether the employee has been previously warned regarding the matter.