Employee's liability for damage

14/08/2022

Dependent work must be carried out at the employer's expense and responsibility. However, in what cases may an employee be liable to compensate the employer for damage caused to them? And to what extent?

1. Breach of a work obligation

The employee is obliged to compensate the employer for the damage caused by a culpable breach of duty in the course of or in direct connection with the performance of his work duties. Thus, in general, the following conditions are given for the obligation to compensate for damages:

  • Breach of a duty in the performance of work tasks or in direct connection therewith;
  • The occurrence of damage on the part of the employer;
  • Causal connection between the breach of duty and the occurrence of damage;
  • (Generally) the fault of the employee, either intentional or negligent.

What if the damage was also caused by the employer's breach of duty? Then the employee's obligation to compensate for the damage is proportionately limited.

Generally, for an employee to be liable for damages, there must be fault on the part of the employee; in the form of either intent or negligence. The fault must be proved by the employer. The exception is in cases of liability agreements (discussed below).

The employee is obliged to compensate the damage by restitution to previous state or compensation in money.

However, a limitation applies: if the damage was caused negligently, the monetary compensation may not exceed 4.5 times the employee's average monthly earnings before the breach of duty.

This limitation does not apply if the damage was caused intentionally, while drunk (or after abuse of addictive substances). In addition, if the employee caused the damage intentionally, the employer may also claim compensation for lost profits.

Furthermore, the employee is also liable for damage caused by intentional conduct in breach of good morals. In this case, the employee may not have breached the obligations imposed by the law, but the employee's conduct is nevertheless generally perceived as immoral.

2. Failure to report of impending danger and failure to avert

If the employer is threatened with the risk of damage, the employee has a duty to report (warn) his/her supervisor. If prompt action is required, the employee has a duty to avert the damage (except where he/she is unable to prevent the damage from occurring - e.g. lacks the necessary physical ability or knowledge, or would put himself/herself or others at serious risk).

In the event that the employee fails to report of the danger or fails to take action, and does so culpably - at least in the form of conscious negligence, and the damage could not otherwise be compensated for, the employer may require the employee to share in the compensation for the damage. Thus, the following conditions must be present for the obligation to compensate for damages to arise:

  • Breach of the duty to report the impending damage or to avert it;
  • The occurrence of the damage on the part of employer;
  • Causal link between the damage and the breach of duty;
  • Culpability at least in the form of conscious negligence;
  • The damage cannot be compensated otherwise.

In these cases, the employee's obligation to compensate for the damage arises only secondarily: the employee was not the one who caused the damage directly. The employee merely failed to report or avert the threatened damage. The primary liability rests with the person who brought about the damage.

Example: A neighbour dropped a cigarette butt when leaving the building in which the employer resides. However, he dropped it in the dry grass near the employer's parked vehicles. The grass began to smoulder and burn, and the fire approached the vehicles. The employee saw this, and he knew there was a risk of damage to the vehicles. Depending on the circumstances, he either had a duty to report the danger to his supervisor, or a duty to avert the damage. However, he did neither - he was in a hurry to get home from work. The fire subsequently damaged the vehicles. Who is liable for damages? If the person who directly brought about the damage (the neighbour) was found to be at fault, he would be liable for compensation. However, if the direct cause of the fire is not identified, the employee would be liable for compensation. But would he have to compensate the entire damage?

No, he wouldn't. In such cases, the employee is obliged to contribute to the compensation of the damages up to the extent appropriate to the circumstances of the case. In particular, the circumstances which prevented the fulfilment of the obligation and the significance of the damage for the employer will be taken into account. The amount of compensation is limited to 3 times of the employee's average monthly earnings.

If the employee has caused damage in the course of averting imminent damage or danger, he shall not be liable for that damage. The exception would be cases where the danger was deliberately caused by the employee or where the employee acted unreasonably in the circumstances in averting the danger.

3. Special case - liability agreements

A special case is the so-called "liability agreements". The difference from the "general liability of the employee" are the more stringent conditions for the employee. Under liability agreements, the employee has the obligation to compensate the employer in full for

  • the shortfall of the entrusted values, or
  • the loss of the entrusted things.

The obligation to compensate for shortfall of the entrusted values arises under these conditions:

  • Liability agreement for entrusted values has been concluded;
  • Shortfall occurred on the entrusted values (cash, goods, material stocks, etc.);
  • The employee is presumed to be at fault.

What is a liability agreement for entrusted values? It is an agreement by which the employee agrees to take responsibility for the values entrusted to him by the employer and which the employee is obliged to account for. Such an agreement can only be concluded between the parties to an employment relationship, a fixed-term contract or a fixed-term contract. The agreement must be in writing. It may only be concluded with a self-righteous person who has reached the age of 18 years. The employee may be exempt from the obligation to pay compensation if he/she proves that the shortfall was wholly (or partly) independent on his/her fault.

What are entrusted values? They are, for example: cash, valuables, goods, stocks of materials or other values that are subject to turnover or circulation. The employee has personal control personally them for as long as they are entrusted to him. They are not, for example: tools, a car, office equipment; because they are not intended for circulation or turnover - these are "entrusted things" (see below).

For example: if a liability agreement for entrusted values was concluded with an employee in a warehouse, that employee is liable for any shortfall in the goods located there and controlled by him. However, once the goods are out of the warehouse (e.g. in the shop), they are no longer under the employee's control. Thus, the goods cease to be subject to the liability agreement; if there is a shortfall on those values, the (particular) employee would no longer be liable for it.

Warning! The values for which the employee is liable do not have to be directly stated in the liability agreement for entrusted values. Liability is not limited to the values entrusted when the agreement is concluded. By entering into a liability agreement, the employee assumes liability for any shortfall in any values entrusted to him by the employer at any time after the agreement is entered into.

What about loss of entrusted things?

In the case of loss of entrusted things, the conditions for the employee's liability are as follows:

  • An agreement on liability for the entrusted things has been concluded; or employee has signed a written confirmation by of the receipt of the entrusted things;
  • Entrusted things were lost (tools, protective work equipment and other similar items); and
  • The employee is presumed to be at fault.

An employee may be entrusted with items in virtually unlimited quantities, always against his written confirmation. However, if the value of the things exceeds CZK 50.000, a liability agreement must be concluded between the employee and the employer for the entrusted things.

What is a agreement on liability for the entrusted things? Under this agreement, the employee is obliged to compensate the employer in full for damage caused by the loss of the entrusted things. Again, this agreement must be negotiated in writing, with a self-righteous person who has reached the age of 18 years.

Again, the employee shall be exempt from the obligation to pay compensation if he/she proves that the loss was wholly (or partly) independent on his/her fault.

Case law example: the employee proves that he did not cause the loss of things entrusted to him against written receipt by proving, for example, that he kept the lost things in a locked locker at the workplace. He will also be exempt if he was unable to take care of the things as a result of the work-related injury. It would also be sufficient if established that, for example, the employer failed to provide the employee with a lockable locker to store his belongings and, as a result, the entrusted things were lost.