Employees’ material liability

Employees’ mistakes can lead to sizeable financial losses: from equipment damage to the entrusted property coming up short to the actions detrimental to the company’s customers or contractors. Obviously, in situations of this sort a question arises whether and to what extent the employer may seek redress from the employee. The answer is not so simple. The Polish Labour Code sets out specific rules of the employee’s material liability which in many respects deviate from the guidance known from the civil law. Limited amount of the damages, particular principles for the burden of proof or separate rules of entrusted property make successfully seeking damages by the employer hinge on good knowledge of the statutes and suitable evidence preparation.

There are marked differences between employees’ material liability for the damage inflicted to the employer and the general rules of civil-law liability. The key is the upper limit of the damages that the employer can claim, provided in the Labour Code. For the nonintentional damage the employee liability is solely for the actual loss the employer incurred, with the caveat that it may not exceed three months’ pay that the employee is earning on the day the damage happened. On the other hand, if the employee did the damage on purpose – that is wanted to inflict it (direct intent) or foresaw it as a possibility and did not avoid it (conditional intent) – the damages have no cap and can be to the full extent of the loss.

A notable solution that the Polish labour law deploys is the rule that only the employer is liable for the damage done to a third party by the employee while discharging work duties. Yet, this does not completely preclude the employee being liable for the consequences of their actions, since the employee can, after redressing the damage, demand damages from the employee following the terms specified in the Labour Code (the right of recourse). Should the employee while discharging work duties inflict damage unintentionally on both the employer and a third party at once, they still enjoy the protection provided in the regulation on employees’ material liability. Which means the sum total of damages the employer can claim, covering both their own damage and the amount due to the third party, may not exceed the equivalent of three months’ pay the employee was entitled to on the day of the damage.

What seems worth remembering is that proving all the elements of employee liability does not automatically mean the employer will be indemnified to the full extent set out in the legal regulations after the proceedings. The court, weighing in the circumstances of the matter in their entirety, especially the extent to which the employee’s is to blame and their stance towards the work duties, might after all curtail the value of damages. As a result, the employee might be obliged to pay a sum even smaller than what the statutory limit of liability stipulates.

What should be kept in mind before deciding to file a lawsuit is also the fact that it is the employer that has to prove all the underlying elements of employee liability. The onus probandi includes:

• the unlawful conduct of the employee (breach of work duties),

• the employee’s fault,

• the incurrence of the loss and its amount,

• and the presence of adequate cause-and-effect link between the employee’s actions and the resulting damage.

The employee’s situation in court is thus far more comfortable when compared to typical tort proceedings stemming from commitments where the debtor, not the creditor, bears the burden of proof that not meeting the commitment is a consequence of circumstances the debtor is not liable for.

Notwithstanding the general liability rules, the material liability for entrusted property follows a different norm. If the employee does not return all the property, they are liable for the full amount of the lossincurred by the employer. Still, if the damage was the result of circumstances other than not returning the property or accounting for it, then the regulations providing for the employee’s limited liability do come into play. Another significant modification in the general rules of material liability is also the burden-of-proof placement in the way that benefits the employer more. To claim damages successfully, the occurrence of damage and its value must be shown as well as the fact that the property was properly handed over. Due to the above, despite no statutory obligation to do so, entrusting the property or goods is worth documenting, by means of a delivery-and-acceptance report at least. To avoid liability in such cases, the employee needs to prove the damage occurred for reasons they had no control over.

When drawing up the terms of employment, the company should clearly see that contractual conditions or workplace regulations are not permitted to increase the scope of employee liability beyond the boundaries set by the Labour Code. Labour norms in this respect qualify as unilaterally mandatory, meaning that laying down less employee-favourable liability conditions (e.g. setting the amount of possible damages higher or choosing strict liability as the standard) is null and void.

Effective claims for damages from the employees need the right preparation on the employer’s behalf, it is plain to see, and even that the end result can turn out less than stellar. In practice, prevention plays first fiddle: work needs to be organised well, staff needs to be trained, safety procedures need to be in place, last but not least possibly detrimental courses of action and property entrustment need to be reliably documented. Such precautions tend to minimise the risk of damage itself, for one; they also bolster the employer’s position in the cases where damages are sought before the labour court.