Damage to a Third Party Caused by the Employee

An employee may cause damage to others than the employer in the course of the employment. The damaged party may for instance be a fellow employee, customer or anyone else present at the workplace.

In these situations, the employer is liable to compensate the third party for damage caused by an employee. The employer may, however, afterwards collect from the employee damages paid to the damaged party. The employee may be liable for the part of the cost of damages caused by him/her to the employer considered reasonable taking into account the extent of the damage, the nature of the act or omission, the position of the employee causing the damage, the circumstances of the damaged party and other relevant circumstances. Damages are not awarded to be payable by the employee at all if the employee has been only slightly negligent.

An example demonstrating the liability of the employee and the employer is an incident where a broker employed by a real estate agency had neglected his duty to ensure that certain conditions precedent to a contract had been fulfilled before the balance of the purchase price was paid. As a consequence, the buyers were later forced to pay the seller’s debt. The real estate agency was found liable to compensate the buyers for the loss but could collect the amount of from the broker.

The employer’s liability to compensate a third party for damages caused by an employee does not extend to damages caused outside the course of employment. If a damage caused by an employee does not relate to his/her work, the employer is not liable for such damage.