When does employee limited liability apply?

When does employee limited liability apply?

When an employee commits an error during the performance of his employment contract and thereby causes damage to the employer or to a third party (another employee or a customer, supplier, etc.), this employee is in principle not liable for this damage.

Article 18 of the Labor Contracts Law provides for the limitation of liability of the employee during the performance of the employment contract. Only in three exceptional cases an employee will still be liable. In principle, this means that the employee is not liable for the damage he causes to the employer or third parties in the performance of the employment contract.

The underlying objective of this limited liability is the protecting the employee against the increased risks of liability to which he may be exposed in the performance of the employment contract and which may have potentially severe financial consequences for him.

However, there are 3 exceptional situations in which the employee can indeed be held liable for the damage he causes to his employer or third parties in the performance of his employment contract. The employee is only liable for damage caused by fraud, a serious error or a usually common slight error.

1. FIRST EXCEPTIONAL SITUATION: CHEATING A first exceptional situation is this one in which the employee intentionally or fraudulently causes harm. Fraud involves intentional wrongdoing that always presupposes the will to harm. Fraud requires (1) the intention of the employee to knowingly violate an obligation to which he/she is bound. In addition, it also requires that (2) the employee's intent to cause not only the fact from which the harm arises but also its harmful consequences. Consequently, there are two constitutive components that must be fulfilled for this to occur. Example: theft, fraud, intentional destruction, ...

2. SECOND EXCEPTIONAL SITUATION: A SERIOUS ERROR The second exceptional situation is that in which the employee causes harm to the employer or to third parties because of gross misconduct. Serious fault involves a fault so gross and excessive in nature that it is inexcusable on the part of the person committing it. The constitutive component of serious fault is that it is an unintentional fault that is so gross and excessive that it is inexcusable by the employee. Unlike cheating, the employee's intent to harm is absent here. BUT the employee here is aware that his wrong action could cause harm. In assessing this, the court will take into account the circumstances of the mistake that could potentially take away the character of a serious mistake: - The rhythm of work; - The complicated operation of some machines; - The lack of experience; - Fatigue; - Misjudgments; -
   Example: smoking in a room where flammable materials are stored despite a prohibition sign, still driving under a bridge with an oversized truck despite a signage sign, ...

3. THIRD EXCEPTIONAL SITUATION: AN ORDINARILY OCCURRING SLIGHT ERROR The third and final exceptional situation is this one when an employee commits a slight error that keeps repeating itself, without each error in itself resulting in the employee's liability. The slight error does not have to be the same error every time, but when multiple slight errors occur, they must occur within a relatively short period of time for the employee to be liable. The slight error that usually occurs is an error that a normally attentive person would not commit. The error must be repetitive in nature. For example, if it is an ordinary accounting error committed out of absent-mindedness, then there is no liability. BUT: if the employee makes these mistakes repeatedly, indicating a lack of professionalism, he can be held liable.

Damages When the employee is held liable, he must compensate the damage caused to the employer. The amount of the compensation must be determined by mutual agreement between the parties (or, in the absence of agreement, the amount is determined by the court) and only after the facts that triggered the employee's liability. The compensation determined may be deducted from the employee's salary up to a maximum of 1/5 of that salary. This limitation does not apply when the employee committed fraud or when the employee voluntarily terminated his employment relationship before the settlement of the compensation. It is important to note that the employer must have a duty to mitigate damageshas.

For example: in the case of a company car with car insurance. Suppose damage has occurred and was estimated by the garage at 1,500 euros. An insurance often intervenes with a deductible of a certain amount, for example, 800 euros. The remaining amount is covered by the insurance. In this case, of course, the employer cannot recover the integral amount of 1,500 euros from the employee. The employer can only recover from the employee the effective amount paid by the employer, i.e. 800 euros.

Do you have questions about employee liability? Our experts are happy to assist you. Contact us at info@bannister.be or by calling 03 369 28 00.