Liability for damage caused by the employee/employer

Just like in any other place, a great deal of damage, both material and non-material, may occur in a workplace by its very nature. Of course, the Labour Code (including some sub-legal regulations, such as Government Regulation No. 290/1995 Sb., establishing a list of occupational diseases) adequately responds to this fact and comprehensively regulates compensation for damage in labour relations; therefore, the provisions of the Civil Code on obligations arising from torts cannot be applied even on a supplementary basis (see Liability). Labour liability is always a derivative relationship that cannot exist without a prior underlying labour relation. However, if the employee causes damage, the obligation to compensate for the damage survives the termination of the employment relationship.

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Liability for damage caused by the employee

Section 250(1) of the Labour Code stipulates that an employee is liable to the employer for damage caused by a culpable breach of obligations in the performance of work tasks or in direct connection therewith. It is therefore subjective liability.

A prerequisite for the general obligation of an employee to compensate for damage is:

  • a breach of obligations in the performance of work tasks or in connection therewith
  • occurrence of damage
  • a causal relation between the breach of obligation and the damage (in other words, that the breach of obligation caused the damage)
  • the employee’s fault

These prerequisites must be fulfilled simultaneously; if one of them is not, the employee is not obliged to compensate for the damage.

The obligation that the employee is obliged to fulfil must be imposed by a generally binding legal regulation, in particular, an act, a government regulation, a statutory measure of the Senate, legal regulations issued by the ministries and other central government authorities, or an employment contract, collective agreement or other contracts (such as an agreement on work performed outside employment). However, these may be obligations imposed by instructions from superiors or, for example, duties arising from work rules. An employee is in breach of obligations in the performance of work tasks or in connection therewith if the employee objectively and subjectively pursued the performance of the work tasks by such activity (not, for example, if the employee commits a property crime at the employer’s expense, even if it is temporally and materially related to the performance of work tasks).

In the event that an employee causes damage to a third party in the performance of work tasks or in direct connection therewith, the employee is liable only in relation to the employer. Contrarily, the employer will be liable to the third party. However, this is not the case if it was an “excess”, i.e. if the employee caused the damage not in connection with the performance of work tasks (e.g. if the employee takes purchased furniture up to the apartment and takes the opportunity to steal the wallet of the apartment owner). If the damage is at the same time caused by a breach of the employer’s obligations, the employee’s obligation to compensate for the damage is proportionally limited.

Scope of damages

The employee is obliged to compensate the employer for the actual damage in cash unless the employee compensates for the damage by restoring the original state (for example, by professionally repairing the damaged machine on his own). As for damages, in labour law, only actual damage is compensated, not lost profits, unless the employee caused the damage intentionally (but if the employer compensated a third party for lost profits, the employee is obliged to compensate the employer as it was actual damage). The scope of compensation that the employer may claim from its employee is set by the Labour Code. Specifically, the compensation may not exceed 4.5 times the employee’s average gross monthly earnings. However, this statutory limit does not apply if the employee caused the damage intentionally, while drunk or after abuse of addictive substances. The employer is obliged to discuss the amount of the claimed compensation with the employee and notify the employee in writing, usually within one month from the date on which it was established that the damage occurred and that the employee is liable for it.

Special liability

Special liability applies if the employer and the employee have entered into a liability agreement to protect the values entrusted to the employee for accounting (e.g. cash, goods, valuables, material stocks). This agreement may only be concluded with a fully legally competent employee (18+) and must be made in writing. The employee who is liable for the deficit in entrusted values is obliged to pay for the deficit in full unless the employee proves that the deficit was caused in whole or in part without fault on his part. In contrast to the general obligation to compensate for damage, the employee’s fault is presumed in this case and the employer does not prove it to the employee.

Another case of this liability is the liability for the loss of items entrusted against a written confirmation (e.g. mobile phone, laptop or car). In such a case, the employee is obliged to compensate for the damage in full (without limitation) unless the employee proves that the damage was caused in whole or in part without fault on his part. If the value of the item exceeds CZK 50,000, a written agreement must be concluded with the employee. However, the employee may withdraw from the liability agreement in writing if the employer has not created conditions to ensure the protection of the entrusted items against their loss.

Employer’s liability to pay damages

The employer is obliged to compensate the employee for damage or non-pecuniary harm incurred by the employee in the performance of work tasks or in direct connection therewith under the conditions laid down by the Labour Code, whether it was caused by the employer, other employees, third parties or any other fact.

A prerequisite for the general obligation of an employee to compensate for damage is:

  • a breach of a legal obligation or deliberate conduct against good morals (by the employer, employees acting on the employer’s behalf in the performance of its tasks and by third parties)
  • damage caused in the performance of works tasks or in direct connection therewith
  • a causal relation between the breach of obligation and the damage

The employer’s obligation to compensate the employee for damage is fundamentally objective, which means that it does not require fault. The employer may be exempted from its liability only in the cases stipulated by the law. If the employer proves that the injured employee also caused the damage, the employer’s liability is proportionally limited (i.e. the employer compensates for a proportionate part of the damage according to its degree of fault). The employer compensates for damage in cash unless it compensates for the damage by restoring the original state. The employer is obliged to compensate the employee for actual damage. If the damage was caused intentionally, the employer is also obliged to compensate the employee for lost profits.

In addition to the general liability of the employer to compensate for damage, the Labour Code distinguishes three specific obligations to compensation for damage, namely:

  • the obligation to compensate for damage incurred by the employee in averting damage
  • the obligation to compensate for damage to items put aside, i.e. items that are usually brought to work (e.g. clothes, a wedding ring, not valuable jewellery or a larger sum of cash) and that the employee put aside in the performance of work tasks or in direct connection therewith at a designated (e.g. a locker) or usual (e.g. a changing room or on a coat rack) place
  • the obligation to compensate for damage or non-pecuniary harm caused by an occupational accident or disease

What issues do we typically handle for clients in relation to liability for damage caused by the employee or employer?

  • What should I do if I have been harmed at work?
  • What are my obligations if I have caused damage to my employer?
  • What should I do if I am accused of causing damage that I did not cause?
  • When can an employer be exempted from liability for damage to an employee?
  • How to draw up an agreement on liability for the loss of entrusted items exceeding the value of CZK 50,000?
  • How can I withdraw from an agreement on liability for the loss of entrusted items exceeding the value of CZK 50,000 if my employer has not created conditions to ensure the protection of entrusted items against their loss?
  • In what scope can the employer claim damages from its employee?