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In Case of Emergency: What Does Employee Liability Mean?

As an employee, you are obligated to exercise the necessary care when performing your professional duties.

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You are responsible for your actions and can be held accountable in the event of damage.

This article explains when this applies and what legal conditions need to be considered.

You could quickly face claims for compensation—so make sure to inform yourself in advance.

Overview:

  1. Employee Liability – What Does It Mean?
  2. The Specifics of Privileged Employee Liability
  3. The Limits of Employee Liability – When and to What Extent an Employee is Liable
  4. Damage to a Third Party – Your Liability as an Employee
  5. What to Do in Case of Damage
  6. Conclusion
  7. FAQs

1. Employee Liability - What Does It Mean?

As an employee, you are liable for damages or losses caused to your employer, customers, or third parties through your actions. This includes damages arising from work-related activities as well as those caused to the mentioned groups through tortious acts.

You need to know: The regulations of labor law generally apply to your employment relationship. Since labor law is legally part of civil law, the provisions of the German Civil Code (BGB), including the liability regulations anchored there, are applicable.

Attention: As an employee, according to § 276 BGB, you would be liable for intent and any form of negligence within the scope of work-related activities.

Now you know how quickly damages can occur when performing your work duties. These do not need to be intentional. Even with the greatest care, material, personal, or financial damages can occur to your employer, colleagues, customers, or other third parties. Imagine if you had to bear the full cost of damages, regardless of the degree of fault—whether it involves slight, medium, or gross negligence. Could you afford to cover that in the event of damage?

To mitigate this risk, your employment relationship is subject to special regulations—the principles of employee liability.

2. The Specifics of Privileged Employee Liability

Since employment relationships are designed to be long-term, the error rate is significantly higher compared to private life, and even with the greatest care, damage cases will likely occur over time. Human errors due to momentary lapses happen repeatedly. Additionally, as an employee, you could quickly become overwhelmed by the financial magnitude of the damages to be compensated, if not driven to financial ruin.

The legislator has taken this into account, and the following special provision applies to your position as an employee: internal damage compensation or privileged employee liability.

The principles of employee liability are as follows:

  • Liability is limited to damages that occur during working hours.
  • The employee was placed in a position to cause the damage through an employment-related instruction, i.e., a task or directive initiated by the employer.
  • Liability is differentiated based on the three degrees of fault: slight negligence, medium negligence, and gross negligence.
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3. The Limits of Employee Liability – When and to What Extent an Employee is Liable

To determine the extent of your liability as an employee, the degree of your fault at the time of the damage must be taken into account. A distinction is made between:

Intent and grossly negligent behavior = The employee is fully and unrestrictedly liable

Intent requires that the damage was caused deliberately and knowingly.

Gross negligence means that, as an employee, you have violated the “necessary due care” to a significant degree. This applies, for example, when you disregard common and clear rules of conduct.

Practical examples:

  • Running a red light
  • Reversing without checking the driving path
  • Driving under the influence of alcohol
  • Using a phone in the car without a hands-free system

Special provision: If there is a significant disproportion between the amount of damage and the employee's salary, or if the employer failed to take necessary precautions (e.g., lack of insurance), the courts will examine to what extent the damage compensation is distributed between the employee and employer.

As a rule, in cases of gross negligence, the employee is liable for the damage only up to a maximum of three months' gross salary.

Medium negligence = Liability is shared between the employer and the employee

Under moderate negligence, it is understood that the "care required in traffic" has been disregarded, but it is not apparent that the actions were either grossly negligent or merely slight.

Only in cases of moderate negligence is the resulting damage divided between the employer and the employee. However, dividing the damage does not automatically mean splitting it in half. Instead, each case is evaluated individually, taking the specific circumstances into account, and an appropriate liability share is determined.

This means:

For example, if you, as an amployee, have a typically higher liability risk due to the nature of your work, you share of liability decreases accordingly!

Additionally, factors such as the employee's salary, the extent to which the employer could have insured the associated risk, the employee's personal circumstances, and their professional background within the company are also taken into consideration.

Practical examples:

  • Forgetting to engage the handbrake when parking a truck
  • Forgetting travel documents as a flight attendant

Slight Negligence = The Employee is Not Liable

If the damage is based on minor or slight breaches of duty that could happen to any employee, the employee is not held liable.

Practical examples:

  • Minor carelessness, such as accidentally dropping fragile items

4. Damage to a Third Party – Your Liability as an Employee

If a third party is harmed, a distinction must be made between property and financial damages and personal injuries.

In the case of the latter, the so-called "liability transfer through insurance" applies. This means you, as an employee, are not liable if you are responsible for a colleague's personal injury. Provided no grossly negligent or intentional act is involved, the statutory accident insurance will cover the damages.

If property or financial damages are caused to third parties during business activities, the employee has a so-called right of indemnification against the employer.

This means the injured party asserts their claim for compensation against the responsible party, in this case, the employee who caused the damage. However, since the damage occurred within the scope of the employee's professional duties, the employee can exercise their right of indemnification against the employer.

The extent to which the indemnification claim can be asserted also depends on the principles outlined in point 3 regarding internal damage compensation. This is determined based on the weighting between gross, moderate, and slight negligence.

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Would you like to learn more about director liability? Read this article.

5. What to Do in Case of Damage

If the case does not clearly involve slight negligence—such as damages that are commonplace in everyday business—we recommend consulting an employment law attorney. In some situations, significant claims for damages may arise. To avoid these, the circumstances of the individual case must be carefully and promptly examined and evaluated. An employment law attorney can assist you with this.

How would you evaluate the following case, for example?

An employee, startled by the honking of another driver while waiting at a traffic light, drives into the intersection without a green signal, causing a traffic accident.

In this case, the Hessian Regional Labor Court (LAG) ruled in October 2008 that the employee acted with slight negligence. The court reasoned that honking and the movement of other vehicles often create internal pressure, agitation, and impaired perception, leading to hasty reactions. As a result, the employee was not liable for damages to the insurer because their actions did not amount to gross negligence.

As you can see, assessing individual cases requires expertise. Seek professional advice!

Are you involved in a damage case?

Consult an employment law attorney to discuss your options and determine the best course of action.

6. Conclusion

  • Employee Liability: Refers to the responsibility of an employee to compensate for damages caused to the employer, customers, or third parties as a result of work-related activities.
  • Privileged Employee Liability: The legislator acknowledges the special position of employees and provides for an internal damage compensation system to prevent excessive financial burdens on them.
  • Liability Limits Based on Degree of Fault: Liability varies depending on the severity of negligence:
  • Intentional Misconduct: The employee is fully liable.
  • Gross Negligence: Liability is typically capped at three months' gross salary.
  • Moderate Negligence: Liability is shared between the employee and the employer.
  • Liability for Third-Party Property and Financial Damages: The employee can assert a right of indemnification against the employer.
  • Liability for Third-Party Personal Injuries: Statutory accident insurance can cover personal injuries to third parties.
  • Steps to Take in a Damage Case: Consult an employment law attorney to clarify your rights and obligations, and to avoid potential compensation claims.
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7. FAQs

What is Employee Liability?

Employee liability refers to the legal responsibility of employees for damages that occur during their professional activities. This includes the duty to exercise the necessary care when performing tasks and being held accountable for any damages caused.

How does privileged employee liability differ from regular liability?

Privileged employee liability takes into account the unique position of employees and provides for an internal damage compensation system to prevent excessive financial burdens on them. This means that liability is apportioned based on the degree of fault.

What are the limits of employee liability?

Liability varies depending on the severity of fault. In cases of intent, the employee is fully liable; in cases of gross negligence, typically up to three months' gross salary. In cases of moderate negligence, liability is apportioned between the employee and employer. Slight negligence generally does not result in employee liability.

How are damages to third parties handled?

In the case of damages suffered by third parties, such as property and financial damages, the employee can assert a right of indemnification against the employer. Statutory accident insurance can cover personal injuries.

What steps should an employee take in the event of damage?

In the event of damage, it is recommended to consult an employment law attorney to clarify rights and obligations appropriately and to avoid potential compensation claims. It is important to carefully examine and evaluate the circumstances of the individual case, as liability can vary depending on the degree of fault.

Picture credits: © AndreyPopov | Canva.com

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