Who pays for damage to company property?

Damage to company property is as easy as an employee spilling a drink on a company laptop, dropping a smartphone or ripping their work uniform.

But who is responsible for covering the costs? Is it the employer or the employee?

You may think that you can just deduct the amount to cover the repair or replacement from their wages, but the truth is that it’s a bit more complicated than that.

What does the law say about wage deductions?

The law clearly specifies the circumstances in which an employer can make deductions from workers’ wages. This includes where the deduction is:

  • permitted by statute
  • laid down in the worker’s Contract of Employment
  • permissible due to the worker providing their written consent
  • as a result of an overpayment of wages
  • due to the fact that the worker has taken part in a strike or industrial action
  • to fulfil the terms of a court order.

If you have made an unlawful deduction from a worker’s wages, the worker can bring a claim in the Employment Tribunal to recover the amount of the deduction. The claim must be brought within three months of the date of the last deduction.

Where does this leave the employer?

The law leaves you two options. Firstly, you will need to look at the employee’s Contract of Employment to ascertain what whether it reserves the right to deduct from their remuneration the reasonable costs of making good any loss or damage to property caused by the employee’s wilful act, carelessness or negligence.

If you don’t have a contractual right, it leaves you with the second option of getting the employee’s written consent to cover the costs. Of course this may not be easy – the damage or repair may be extremely costly and the employee may be very reluctant to pay. If you do manage to get their consent, make sure it is in writing and you keep a record of it.

Can it be a disciplinary issue?

If there has been deliberate or wilful damage to property or gross negligence that can result in substantial loss or damage to the employer’s property, it may be considered an act of gross misconduct. If, on completion of the investigation and the disciplinary procedure, the employer is reasonably satisfied that gross misconduct has occurred, this can result in dismissal without notice or payment in lieu of notice.

To discuss this matter further, contact your Ellis Whittam Employment Law Adviser who can provide you with guidance.

Director of Legal Services

James Tamm

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We combine the service quality of a law firm with the certainty of fixed-fee services to provide expert, solutions-focused Employment LawHR and Health & Safety support tailored to employers.

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We combine the service quality of a law firm with the certainty of fixed-fee services to provide expert, solutions-focused Employment LawHR and Health & Safety support tailored to employers.

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