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Can you hold employees financially responsible for damaged workplace equipment (e.g., cellphone, laptop)?

Can you hold employees financially responsible for damaged workplace equipment (e.g., cellphone, laptop)?

Yosie Saint-Cyr LLB, Managing Editor, HRinfodesk, published by First Reference, September 2013

Four hundred and sixty-two people responded to our recent poll, Can you hold employees financially responsible for damaged workplace equipment (e.g., cellphone, laptop)? Of the respondents, 167 (36.15 percent) indicated yes. However, 148 (32.03 percent) disagreed and 147 (31.82 percent) were not sure.

So, what is the right answer?

In general, all employees are responsible for the proper use of a company's physical resources and property. All employees are also responsible for the protection of the company's assets, both tangible (such as material, buildings, people, property, information, revenues) and intangible (such as communications networks, information systems, intellectual property). All employees must act reasonably and take appropriate measures to prevent losses arising from wilful action by others, both outside and within the company, which may result in personal injury, property damage, theft, loss, abuse or unauthorized access to physical or logical assets, and intellectual property (including data).

Generally, an employee is not normally responsible for the replacement of lost or damaged employer-owned equipment at a central or remote workplace unless the employee intentionally omitted or committed a wrongful act or negligence that caused the loss or damage.

In short, this means losses occurring without any fault on the part of the employee or that are merely the result of simple negligence are inevitable in almost any business operation and thus, the employer must bear such losses as a cost of doing business.

However, the law does not generally stop the employer from suing employees for causing property damage in the course of their employment. For a court to hold the employee financially responsible, the onus will be on the employer to prove that any breakage or loss of equipment was caused by a dishonest or wilful act, or by the employee's gross negligence.

In addition, a company does not have a legal duty to bear the cost of replacing or repairing employees' personal property that has been lost, stolen or damaged at work.

Employer/employee liability for damage to company-owned or personal property can also depend on a number of other factors, including whether there are any terms governing liability in the employment contract, whether a custom, policy and practice exists in relation to previous incidents of damaged or stolen employer-owned or personal property, and the circumstances in which the loss or damage to property occurred.

To ensure employees understand their responsibility with respect to company property, employers should include a clause to this effect in their standard terms of employment or any policy. Specifically, the clause should explain the employee's duty of care to company property and that the employee will be held financially responsible for any breakage or loss of equipment caused by a dishonest or wilful act, or by the employee's gross negligence.

To minimize employer liability, another standard term or policy should exclude the company from liability for personal property; for example, stating the company will not accept liability for personal property that has been lost or damaged during the course of employment, and that it is the responsibility of employees to safeguard their personal belongings.

Whether or not an employer justifies holding an employee responsible for breakage or loss of equipment, the employer does not have the right, even with the authorization of the employee, to deduct such costs straight from the employee's pay.

In short, the answer to the poll question is yes, employers can hold employees financially responsible for damage to company property, but the employer must prove that the employee acted with blatant flagrant disregard for foreseeable harm, or acts intending to cause harm, in order to recover damages.

It is in very rare cases where the courts will find an employee grossly negligent. Employers should keep this in mind when considering what actions they will take in response to the damage of company property. A thorough investigation of the events should happen before deciding whether it is worth pursuing damages.