MATERIAL LIABILITY OF AN EMPLOYEE AND EFFECTIVE MEANS FOR RECOVERING DAMAGES

  • 2009-10-21
  • Lina Gudeliauskiene, Associated Lawyer
The main purpose of the material liability of an employee is to recover the damages caused to the employer by the illegal actions or illegal inaction of the employee. To ensure this purpose the Lithuanian Labor Code indicates legal possibilities to protect the real interests of the employer, which can be determined under particular conditions and circumstances.

Lithuanian Labor Law provides for cases when the employee must compensate for all damage when (where the amount to be recovered from the employee is not limited under any circumstances):
- damage was caused deliberately;
- damage resulting from a criminal act of the employee, determined according to the procedure laid down in the Lithuanian Criminal Code;
- damage caused by an employee with whom a contract of full liability has been concluded;
- damage resulting from the loss of instruments, clothes, protective equipment issued to the employee for use at work, also from the loss of materials, sub-products or products in the course of the production;
- damage caused in any other way or to any other property, full liability for which is provided in special laws;
- damage caused by an employee under the influence of alcohol or narcotic or toxic substances;
- where this is provided for in a collective agreement.

In all other not mentioned cases the employee must compensate not in excess of the amount of his three average monthly wages.
Presently many companies in Lithuania are practicing concluding contracts of full liability with most of the employees. This legal instrument undoubtedly influences the employer's benefit to recover the full damages, and the higher level of the employee's responsibility to perform work duties properly and avoid real loss.

Despite this, it is worth mentioning that the contract on full liability of the employee is bound and legally effective only if the following conditions are satisfied:
- a contract of full liability may be concluded with the employees whose work is directly related to safe-keeping, acceptance, release, sale, purchase and transportation of material assets and in respect of the personal protective equipment issued to the employee for use at work;
- a list of specific kinds of work and duties must be provided in a collective agreement or work regulation (if the collective agreement is not adopted) of the company.
- contract of full liability must be executed in writing;
- contract of full liability must provide for what types of material assets an employee shall assume full liability, and for which obligations liability shall be assumed by the employer, by providing the conditions which would prevent the creation of liability.

The most important and specific from the above-mentioned conditions is the legal requirement to adopt the collective agreement in the company, without which it can become very complicated to recover full damages caused by the employee, and the contract on full liability can even be recognized void.

There are some exact damage recovery methods which should be known by the employer. The first of them is related to the written agreement concluded between the employee and the employer under which the employee assents to compensate the damages in goodwill. It means that the parties of such agreement are free to consider and agree, for any amount, the compensating damages, terms and other conditions. Damages that aren't compensated for, of his own free will, in kind or cash and which are not in excess of his average monthly wage may be deducted from the employee's wage by a written order of the employer. It is important that the employer's order to recover the damages at the latest may be made within one month from the date of disclosure of damages, and this can be made only when the employment contract is applicable.

Finally, the employer has the possibility to apply to the court with the claim for the incurring of the material liability and recovery of the damages from the employee, in the term of three years if such circumstances are met: damages are in a higher amount than the employee's average monthly wage; the employer has missed the term of one month for the deduction; employment contract is already terminated and there are no calculated or not paid wages for the employee.

In conclusion, the material liability of the employee, and especially the possibility to recover full damages, support in escaping real loss to the employer, but also demands the precise application of the legal rules and conclusion of the collective agreement in the company.

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora
Pylimo g. 6, Vilnius
Tel. 8 5 2124084; fax: 8 5 2122741    

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