Material liability of an employee acting as the President of the Management Board of a limited liability company for damage to the employer’s assets in the light of the latest Supreme Court case-law

The liability of an employee for damage caused to the assets of an establishment as a result of the non-performance or improper performance of his or her duties shall be determined by the provisions of Article 114 – 122 of the Labour Code. In accordance with the basic principle adopted in Article 115 Under the Labour Code, an employee is liable for damage within the limits of the actual loss suffered by the employer and only for the normal consequences of the act or omission from which the damage resulted. The limits of an employee’s material liability depend on whether the damage was caused intentionally or unintention

If the employee has inadvertently caused the damage, the provision of Article 119 Labour Code, which stipulates that compensation shall be fixed at the amount of the damage caused, but may not exceed the amount of three months salary to which the employee is entitled on the day the damage is caused. However, in the case of intentional damage, the staff member shall be required to make good the damage in full, in accordance with Article 122 of the Labour Code. Taking into account the above basic rules of an employee’s material liability, special consideration should be given to the situation in which the employee who is also a member of the management board is responsible for the damage.

In the facts of the case examined by the Supreme Court under appeal, ref. deed: I PK 204/18 the subject of the dispute was to hold a (material) employee who is the president of a limited liability company and at the same time is the sole shareholder of the company liable for damages. The thesis of the Supreme Court that such a case is significantly different from the situation in which the damage will be caused by a private employee of the company, who is not a member of the bodies of the company, and even more so is not the only member of those bodies, requires approval. By judgment of December 18, 2019. The Supreme Court, in deciding on the case of the Ref. Act: I PK 204/18 stated that the standards of responsibility of employees who manage the workplace „are higher than the average employee because the assessment of unlawful conduct and guilt is stricter here”

Incorporated case-law strengthening the position of aggrieved companies (work statements) in compensation disputes with members of the management board under labor law, because one additional argument should be considered for the train related to material management in the scope of a wide scope of regulation depending on art. 122 of the Labor Code, and not only in terms of three-month remuneration pursuant to art. 119 of the Labor Code.