Damage To Company Property

When a company employee either out of negligence or willful misconduct causes damage to company property, the employer is left wondering what they could do about it. Damage can come in many shapes and forms. From ripping out their uniform to using a company-issued laptop to download malware and spreading a virus in the company network.

Because these mishaps occur on a regular basis in the workplace, it is standard for many businesses to have the employee reimburse the company for the losses incurred. It’s a way to protect the employer from any intentional misconduct or unauthorised usage of company property. The usual way for reimbursement is through deductions from the employee’s paycheck. But legally speaking, it’s not that simple.

Wage deductions

In the eyes of the law, the employer cannot deduct from the employee’s paycheck to cover for losses or damage to company property caused by the employee. In fact, the Employment Rights Act 1996: Section 11 protects the employee’s wages against any unlawful deductions. It states that any deductions have to satisfy the following conditions:

  • In cases where the employee was overpaid.
  • If the employee had left work to participate in a strike or industrial action.
  • The deductions are part of a court order.
  • It’s set in the Employment Contract.
  • The employee has provided their consent in writing.

Any other forms of wage deductions are not legal, and an employee can make a claim against the employer in the employment tribunals. It is clear that the employer has to state the company’s policy clearly in the Employment Contract to enforce it later on. In which case it’s the employer’s duty to notify the employee in advance of such policies. If however, no such clause exists in the contract, the employer would need the employee’s written consent before they can make any deductions from the employee’s wages to compensate for the losses.

The employer’s options

If the law made it difficult for the employer to deduct from the worker’s wages to pay for losses to company property, the employer still has other options to make up for damages caused by negligence or gross misconduct. These options are:

  • Discipline: Just as in other cases of employee’s poor performance leading them to be disciplined, any employee that causes wilful damage to company property due to negligence should be disciplined. The form and manner of such discipline vary according to each company’s internal laws and policies.
  • Termination: In cases of gross misconduct on the part of the employee which lead to huge losses and damage to company property, the employer may launch an investigation and a disciplinary procedure. If the investigation concludes that the employee was responsible for the misconduct, the employer can terminate them with immediate effect.
  • Civil legal action: The employer can take legal action against the employee seeking compensation for the losses and damage caused by the employee.

Summary

Even if a negligent employee causes damage to company property, the employer cannot deduct the costs from the employee’s wages without written consent from the employee. The employer should also include such clauses in the Employment Contract to give themselves leverage in cases of gross misconduct and wilful negligence.