Damage to the Employee Caused by the Employer

An employer who breaches or neglects its obligations under the employment relationship or such arising out of the Employment Contracts Act is liable to compensate the employee for any resulting damages. A prerequisite is that the employer has caused the damage intentionally or with negligence. In absence of such intention or negligence, the employer is not liable to pay damages. The amount of damages may be reduced if the employee contributed to the damage.

The employer may cause damage to an employee by organizing the workplace carelessly, by discriminating an employee or by exercising supervisory powers in an improper manner. Damages caused by accidents do not form part of Employment Contracts Act’s liability for damages, as such are dealt with in accordance with other legislation such as Accidents Insurance Act, for example. An example of these principles is the following case. A chef of a restaurant suffered an electrical shock from an electrical appliance whilst at work as a consequence of an incorrectly installed plug. The chef was diagnosed with a serious traumatic stress reaction. The entrepreneur that had installed the plug was ordered to pay damages to the chef as compensation for his suffering. This was not considered to be an accident but a coverable damage under the Employment Contracts Act clearly caused by the employer’s negligence.

The employer’s liability for unlawful termination of a contract of employment is separately dealt with. For further information, see [The Employer’s Liability to Pay Compensation for Groundless Termination of the Employment Contract]⁠.