Wtorek, 26 września 2017 r.

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Employee financial responsibility

One of the most important elements of the employment relation is the rule, according to which, it is the employer who takes a risk connected with running a business activity. An employee does not bear financial liability for business damage, if that is not their fault. However, an employee, performing their job, manages the employer’s property or makes decisions, which have financial and material consequences for the employer. So there is a risk that by reasons of non-performance or unsatisfactory performance of one's duties (that is of just situation), the employee causes damage to the employer. Then the employee shall be financially liable for that.

In principle, issues of property damages, compensations, reimbursements etc. in the Polish law are regulated by the Civil Code. However, financial responsibility of employee, that is a person engaged in the contract of employment, is an exception. This one is extensively regulated by the fifth section of the Labour Code, which means that the general Civil Code provisions are not applicable to such cases. In this situation the Labour Law is milder towards employees, which results from its assumption – the employee legal protection. One should emphasize that the employee engaged in civil-law agreement is not additionally protected in principle. This means exposure to serious consequences of the possible damage caused to the employer. 

The Labour Code specifies two kinds of employee financial liability:

  • liability in line with general principles for damage caused to employer;
  • special liability – for property entrusted to employee that they must return or account for it.
  • According to the articles 114 and 115 of the Labour Code, the premises the employee financial liability are:
  • non-performance or the unsatisfactory performance of employee’s duties, which is an illegal action;
  • employee’s misconduct;
  • real damage suffered by an employer;
  • cause-and-effect relation between employee’s action and the damage occurrence.

The term damage, similarly as in the Civil Law, has two different meanings: the real damage and profits the employer might have made. An employee, who acted unintentionally, bears liability only for the real damage caused to an employer (does not pay damages for the profits that might have been made). In this case the liability concerns only typical, ordinary results of such act or default. It is worse if an employee is guilty of intentional damage or was entrusted a property and did not return or account for it – here the liability refers also to the profits the employer might have made. 

According to the regulation of the article 116 of the Labour Code, responsibility to prove employee’s misconduct, violation of employee’s duties and the causality between employee’s act/default and the damage, and after all assess the value of the damages lies with the employer.  However, employee liability is limited inasmuch as the very employer or any other person contributed to the occurrence of the damage or to its increasing (Art. 117 of the Labour Code). 

As mentioned before, there is a principle that an employee is responsible for the damage of their fault.  However, there is no fault of an employee if the damage resulted from the act within the acceptable risk range (Art. 117 § 2). The acceptable risk of an employee is determined by:

  • their professional experience;
  • current knowledge in a given field;
  • certain goal of the employer;
  • rules and regulations set in the employing establishment;
  • value of the expected profits (which should be greater than the damage degree);
  • probability to gain expected profits (which should be higher than the probability of the damage degree).

If a few employees caused damage, each of them is responsible for it to the extent, which a given person contributed to the unfortunate event. Article 118 of the Labour Code requires spreading the liability among employees proportionally to the degree of their misconduct. This principle refers to unintentional misconduct as well. Obviously in this case the provision of the article 116 of the Labour Code, which obliges the employer to prove the misconduct of every employee liable for the damage, is effective.

If an employee caused damage intentionally, they are liable to fully compensate or repair it (Art. 122 of the Labour Code).  Such deliberateness occurs when an employee wants to cause this damage (direct intention) or foresees a possibility of occurrence of the damage and accepts this state of affairs (possible intention). Full damages means covering both the real damage suffered by employer and profits which an employer might have made but did not. 

It is different, when an employee caused damage unintentionally. In this case the article 119 of the Labour Code sets the upper limit of the amount of the possible damages to the amount of three-month remuneration of the employee. When setting the amount of employee’s salary, which determines the amount of the damages, we base on the rules applied to set the amount of the equivalent in money for the holiday leave. As for the part-time employee, the real amount of their salary is taken into account. In some cases the damages can be more than three times as high as the salary – however, this regards only the situation, in which one employee was at fault several times, means committed the misconduct more than once, which resulted in a few damage. If this is the case, the amount of compensation is calculated accordingly to each damage sustained – applying the provision limiting the amount of such compensation to the three times as much as the salary. But if a few misconducts and damages occurred – compensations are added up, and if a single misconduct resulted in a few losses – then only one compensatory damages is awarded. The employer is obliged to prove the deliberateness of the employee’s misconduct and show that the damage was caused of their will, rather than e.g. through the negligence or recklessness, which are treated as the unintentional misconduct. 

It is worth adding that enforcing the employee financial liability for the damage they caused, is a so-called ‘favourable law to the employer’. And so the employer decides, whether they will purse the liability with all severity or whether they will relinquish this right, for e.g. the employee’s ordinary responsibility. 

The employer can reach an agreement with the employee, on the basis of which the employer will satisfy their claim. The settlement can be reached in the court as well.  The condition of the settlement is employee’s acceptance of the debt and obligation to pay it off. If this is the case, the article 121 of the Labour Code provides for lowering the amount of damages, if that is the employer’s freewill. Reaching this agreement is profitable for both parties – lets the employer save their costs and effort to prove the employee's misconduct, as well as costs of possible judicial proceedings. The employee has a possibility to pay much lower damages and make the payment in instalments. This kind of settlement is approved by the court – if the employee does not comply with it, the employer has a right to apply to the court for registering the order for enforcement. 

Labour Court is able to lower the amount of damages employee owes employer. In the process of adjudication the court takes all circumstances of the matter into consideration – in particular, the extent of employee’s misconduct and attitude to their duties.

There is another type of liability that employee bears for the property entrusted to them.  This can be money, securities, valuables, tools, instruments, as well as personal protective equipment, clothes, work footwear and other objects associated with the obligation to return or account for it (Art. 124 of the Labour Code). The employee takes responsibility for the deficiency in property entrusted in its full amount, i.e. within the range of the real damage the employer suffered and profits they might have made. This type of liability differs from the above mentioned with the fact that the employer does not have to prove employee's misconduct. There is a legal presumption that it is the employee who is liable for this type of property (accepted in writing) and a cause-and-effect relation occurs between the deficiency and employee’s conduct. However, an employee can relieve themselves from the liability if they prove (note – prove, not make it believable) the damage was caused for reasons beyond their control. Article 124 § 3 indicates that damage can be caused for reasons beyond employee’s control in particular when employer does not ensure conditions which enable protection of the entrusted property. 

In some cases liability for entrusted property is limited in favour of employees.  This regards among others warehouses and shops. In such cases liability rules are settled by a special regulation of the Council of Ministers of 10 October 1975. The extent of employee liability is also defined by many detailed statements of the Supreme Court. In some cases employees can assume also a common financial liability for the property entrusted to them, including the duty of accounting for it (Art. 125 of the Labour Code). I also refer to the detailed legal provisions of the regulation of the Council of Ministers.

 

Sławomir Krenczyk

 

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