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Material liability – what am I liable for?

The employee is liable for damage caused to the employer only to a limited extent. What are the limitations on this liability? What about damage caused intentionally or after quenching thirst with a hoppy drink during working hours?

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The employee is liable for damage caused to the employer only to a limited extent. The damage must always be caused culpably and in connection with the performance of work.

For example, if an employee inadvertently knocks over an important fibre-optic cable on a construction site, his employer must pay the full amount of damages and any lost profits to the victim. However, the employee can only recover a maximum of 4.5 times his average monthly earnings, no matter how high the damage is.

Tip: Read our articles on the subject of work performance agreements and work performance agreements. Find out what to look out for when entering into them and what their advantages are.

However, there are exceptions to the rule limiting compensation for damages or lost profits to 4.5 times the employee’s average monthly wage. These exceptions include:

Intentional damages

The 4½ times limitation does not apply if the damage was caused intentionally, while drunk, or after the use of other addictive substances (e.g., marijuana). However, the employer must prove this. This can be done, for example, by calling witnesses from the “wet district” when the employee admits to his colleagues in the evening after his shift that he cut the cable on purpose in order to “embarrass” the employer.

Material liability agreement

What is material liability

A material liability is an agreement between the employee and the employer. In this agreement, the employee agrees to take responsibility for the values entrusted to him by the employer. The subject of the agreement is always only things used for turnover or circulation. Specifically, it may be cash, prizes, goods, materials or other values that are the subject of the work.

Tip: Does your employer ask you to sign a material responsibility agreement? Read what is underneath and what consequences can it have for you?

For employers, this agreement has two advantages. First, it does not have to prove the employee’s fault. In addition, the employee is liable for the entire loss and the limitation of a multiple of average earnings does not apply. The only defence against a reported shortfall is to show that the employee was not at fault (e.g. a third party was proven to have been robbed on the night in question). If more than one employee enters into the agreement (e.g., an entire shift), the increased liability is on the supervisor and his/her deputy. They pay a greater share of the total damage.

This agreement must be negotiated in writing and automatically terminates upon termination of employment. It is concluded not only for the main employment but also for agreements. However, it can only be concluded by a person over 18 years of age and with full legal capacity.

Tip: A confidentiality agreement is often signed together with a material liability agreement. Leave it to us to draw it up or check it.

The material liability agreement can be withdrawn, but only in certain cases:

  1. The first reason is that the employee performs work other than that for which he or she was hired and which is specified in the employment contract. For example, if the employee was hired to clean the warehouse, but the employer wants him to occasionally cover for the warehouse keeper.
  2. The agreement can also be terminated if the employee is transferred to another job or another workplace. Even officially. In this case, the employee must sign a new agreement.
  3. If the employee has alerted his employer to defects in the working conditions preventing the proper management of the values entrusted to him. If the employer does not remedy these defects within 15 calendar days of receiving the notice, the employee may withdraw from the agreement.

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Agreement on liability for loss of entrusted items

The situation is similar for the agreement on liability for loss of entrusted items. Under the agreement, a specific item (e.g. a laptop) is taken over. Here, the employee also does not have to prove the employee’s fault in the destruction or loss of the item and can claim full compensation without limitation. The employee can only defend himself by proving that he did not cause the destruction or loss of the item (e.g. a colleague destroyed it). The employee can then make good the damage by getting the employer a similar tool for which he or she accepted responsibility (e.g. an equally old and powerful laptop) or by paying for the damage taking into account wear and tear and the real cost of replacement.

Tip: Read our article to learn how to resolve employee liability.

It is also possible to withdraw from the agreement on liability for the loss of entrusted items if the employer has not created the conditions to protect the entrusted items against loss.

Protection of the employer’s property

An employee shall not be liable for damage caused by him in the course of averting damage to the employer or a danger to life or limb which is imminent if he did not deliberately create the condition and acted in a manner appropriate to the circumstances. However, increased caution is also recommended here. The employee has a duty to protect the employer’s property. Thus, if, for example, an employee rushing home saw strange smoke above the lumber store and did nothing, did not report it, but only mentioned it in the pub in the evening, the employer could indirectly blame him for the damage caused by the fire (here he is liable up to three and a half times his average monthly earnings).

Contributory fault

If the employer also caused the damage, the employee is only liable for a proportion of the damage according to the degree of his or her fault. If more than one employee is liable for the damage, each employee shall bear a proportionate share of the damage according to the degree of his or her fault. As a general rule, the court may reduce the amount of damages proportionately for reasons of special consideration. E.g. the employee is of “unsound” mind and in a difficult life situation.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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