Damage to the Employer Caused by the Employee

An employee is liable to compensate the employer for damage suffered by reason of the employee’s neglect to fulfill his/her duties pursuant to his/her contract of employment or the Employment Contracts Act or if he/she otherwise causes damage to the employer in the course of his/her employment. The prerequisite for establishing liability is that the employee has caused the damage intentionally or with negligence.

The employer may suffer damage e.g. where the employee has failed to comply with the employer’s directions, neglects an assignment assigned to him/her or the employee has caused damage to the employer’s property by handling them carelessly. The employee is liable for damages for instance if he/she has breached his/her duty of confidentiality. A clear situation of liability for damage is at hand if the employee steals the employer’s property. The latter is also a criminal offence.

The employee is liable for the part of damage cost by him/her to his/her employer which is considered reasonable taking into account the extent of the damage, the nature of the act, the position of the employee who caused the damage, the needs of the recipient of the damages and other circumstances. Therefore the employee is rarely liable to pay the full amount of damages where the damage is substantial. Damages are usually not determined at all if the damage has been caused due to slight negligence only on the part of the employee. On the other hand, damage caused intentionally is usually determined to be compensated in full, in the absence of exceptional circumstances.

The employer and the employee cannot to the detriment of the employee agree differently upon the liability than what is specified in legislation.