What is employee liability for damage?
Employee liability for damage concerns the rules under which an employee may be required to compensate their employer for loss caused in connection with the performance of work. In Poland, these rules are primarily governed by the Labour Code, particularly Articles 114-127. They apply to persons employed under an employment contract, appointment, election or a cooperative employment relationship.
An employee is not automatically liable for every unfavourable outcome, mistake or financial loss occurring in the workplace. The employer must demonstrate that the employee failed to perform, or performed improperly, their duties, that actual damage occurred, and that there is a causal link between the employee’s conduct and the loss. As a rule, the employer must also prove the employee’s fault.
The scope of liability depends on the circumstances of the case, including the type of damage, the degree of fault, the employee’s remuneration and whether property was entrusted to the employee with an obligation to account for or return it. Different rules may apply where damage was caused unintentionally, intentionally, or involved entrusted property such as cash, equipment, stock or company vehicles.
What does employee liability for damage cover?
Under Article 119 of the Polish Labour Code, where an employee causes damage unintentionally, compensation is generally limited to the actual loss suffered by the employer. It cannot exceed the amount of three months’ remuneration due to the employee on the date when the damage was caused. This statutory cap does not apply if the employee caused the damage intentionally.
Intentional damage may result in full liability. Pursuant to Article 122 of the Labour Code, an employee who deliberately causes damage to the employer is required to repair it in full. Establishing intent requires more than proving an error, lack of diligence or poor performance. The employer must show that the employee intended to cause damage or, anticipating that it might occur, accepted that possibility.
Separate rules apply to entrusted property. Under Article 124 of the Labour Code, an employee may bear full liability for a shortage or loss involving entrusted money, securities, valuables, tools, equipment, personal protective equipment, work clothing, footwear or other property entrusted with an obligation to return or account for it. In practice, the validity of such a claim may depend on whether the property was properly transferred and whether conditions enabling it to be properly safeguarded were provided. Separate rules may also apply where property was entrusted jointly to several employees.
Employee liability may arise, for example, where an employee damages machinery through a breach of safety procedures, loses company equipment, incorrectly handles customer orders, discloses confidential information, causes stock shortages or improperly uses a company vehicle. Each case requires an individual assessment. The fact that damage occurred does not itself prove the employee’s liability.
When may legal advice on employee liability be needed?
Employees may need legal assistance when an employer requests payment for alleged damage, proposes a compensation agreement, deducts amounts from remuneration or claims that property was entrusted to them. It is important to verify whether the employer has correctly identified the legal basis of the claim, established the amount of loss and observed the statutory limits of liability.
Employers may require support when investigating an incident, documenting damage, assessing employee fault, conducting an inventory, preparing an agreement on liability for entrusted property or deciding whether a claim should be pursued. Legal advice is also relevant where several employees had access to the property, where the employer’s organisational failures may have contributed to the loss, or where the employee disputes responsibility.
Employment relationships should be distinguished from B2B cooperation, mandate contracts and management contracts. A person providing services outside an employment relationship may be subject to contractual and civil-law liability rules rather than the employee protection mechanisms set out in the Labour Code. The wording of the agreement and the actual nature of cooperation are therefore important.
A prompt consultation may help prevent unlawful deductions from salary, poorly drafted settlements, unsupported compensation claims and disputes that could lead to litigation. It can also assist employers in preserving evidence and employees in responding before they sign a document or make a payment.
Legal support in employee liability matters
Support from a law firm in matters concerning employee liability for damage may include in particular:
- assessing whether the conditions for employee liability have been met;
- verifying the amount and legal basis of a compensation claim;
- advising on liability for entrusted property and inventory shortages;
- reviewing agreements on material liability and settlement agreements;
- assessing the legality of deductions from remuneration;
- representing employees and employers in negotiations and court proceedings;
- preparing internal procedures for the handover and protection of company property.
Need assistance with employee liability for damage? Contact us.