Guy Castegnaro Ariane Claverie January 29 2014 Company vehicle damage: driver pays? Castegnaro | Employment & Immigration - Luxembourg Guy Castegnaro, Ariane Claverie Employment & Immigration IntroductionNo liability without voluntary action or serious negligenceBurden of proofPublic order aspect of employee liabilityIntroductionDoes an employer have the right to charge its employee where the latter has damaged a company vehicle? This question arose in a recent case(1) in which an employer deducted the amount of the insurance deductible from its employee's wages(2) after having noticed damages to the company vehicle following its return by the employee. This deduction was in accordance with the employee's employment contract, which stipulated that in case of damage caused to the company vehicle, the cost of the insurance deductible would be borne by the employee. However, the Court of Appeal considered that without proving any voluntary fault or serious negligence of the employee, the employer had no right to withhold the amount of the insurance deductible from the employee's wages, even if such possibility was provided for in the employment contract.The case serves as a reminder that an employee's financial liability is limited by three main restrictions.No liability without voluntary action or serious negligenceAccording to the Labour Code, the employer bears the risks caused by the company's activities, which in principle include any damage caused in the context of the employment relationship. The employee is liable only for damages caused by his or her voluntary fault or serious negligence,(3) with the following stipulations:Voluntary actions or serious negligence on the part of the employee are akin to gross misconduct, equivalent to fraud by deceit or gross negligence.Serious negligence does not require deliberate action, but does require a lack of caution, prudence or vigilance that has resulted in damage.(4)For instance, an employee's failure to lock the company van, which resulted in damage to the van and the theft of merchandise in it, was considered serious negligence.(5)Burden of proofThe employer must prove that the damage was caused by the employee's voluntary action or serious negligence. To do so, the employer must prove all of the following elements:the voluntary action or serious negligence of the employee;the extent of the damage;the connection between the damage and the voluntary action or serious negligence of the employee (ie, causality); andthe exclusion of damage compensation from insurance coverage.For example, in a recent case an employer requested that the employee pay the bill issued by a leasing company for damage to the company vehicle following its return at the end of the employment contract. The Labour Tribunal rejected the employer's claim because it had not been established that the employee committed a fault or serious negligence which would have allowed the employer to charge the employee (pursuant to Article L121-9 of the Labour Code) for damage to the company vehicle.(6)In a similar case in which the employer applied a deduction to the employee's wages for damage to the company vehicle, the Labour Tribunal listed all of the evidence that the employer must provide in order to trigger the employee's financial liability. The tribunal ruled that although the law allows salary deductions as compensation for damages resulting from the employee's fault, such deductions are nonetheless allowed only if the damage was caused by the employee within the meaning of Article L121-9 of the Labour Code. Therefore, if the employer wishes to trigger the employee's liability, it must prove, on top of the damage, the characteristics of the fault ascribed to the employee along with a causal link between the fault and the damage. On this occasion, the tribunal held that the damage caused to an 11-year-old company vehicle was insufficient to trigger such liability without concrete evidence of a fault committed by the employee.Where no evidence has been provided of the circumstances of the accident that the employee is alleged to have caused, and where the employer has not established that the accident occurred because of the employee's voluntary action or serious negligence, the employer's claim for repayment of repair costs is unfounded.(7)Public order aspect of employee liability These limits to the employee's financial liability form part of the public order rules. The employee cannot generally renounce these public order provisions by accepting in his or her employment contract (or any addenda) liability for any repairs arising from his or her own actions where these actions do not qualify as voluntary actions or serious negligence.Consequently, employment contract clauses or car policies that require the employee's agreement to take responsibility for potential damage, regardless of the cause of damage or whether the damage was due to the employee's fault, are in principle null and void,(8) as they extend the employee's liability beyond the legal limits.Nevertheless, regardless of the employee's financial liability, the employer is usually free to punish the employee following a disciplinary procedure based on the violation of contractual duties. The sentence (eg, a fine(9) or warning) must be proportionate to the gravity of the employee's fault and based on serious and real reasons.For further information on this topic please contact Guy Castegnaro or Ariane Claverie at Castegnaro by telephone (+352 26 86 82 1), fax (+352 26 86 82 82) or email ([email protected] or [email protected]). The Castegnaro website can be acessed at www.castegnaro.lu.Endnotes(1) Court of Appeal Case 37274, October 24 2013.(2) In principle, a deduction from the employee's wages for the repair of damages caused by the employee is limited to one-tenth of the employee's monthly wages (Article L224-3(2) of the Labour Code).(3) Article L121-9 of the Labour Code. The fault which allows the employer to hold the employee liable for repairs cannot automatically be considered gross misconduct justifying dismissal without notice; these are two different and independent legal situations, and the consequences of one action do not ipso facto lead to the consequences of the other. Nevertheless, hypothetically, the gross misconduct used to justify dismissal without notice could also legitimate the application of Article L121-9 or the serious negligence committed by the employee could lead to dismissal without notice (Court of Appeal Case 36662, June 30 2011).(4) Court of Appeal Case 18422, January 15 1998.(5) Court of Appeal Case 36662, June 30 2011.(6) Labour Tribunal Case 108/13, January 9 2013.(7) Labour Tribunal Case 2848/2011, June 28 2011.(8) Labour Tribunal Case 4401/2012, December 3 2012; Court of Appeal Case 29343, November 10 2005. The employee's liability does not constitute a simple fact that can be subject to confession, but rather requires legal appreciation under the relevant labour jurisdiction (Labour Tribunal Case 4401/2012 and Court of Appeal Case 30607, July 6 2006).(9) In principle, a fine constituting a deduction from the employee's wages cannot exceed one-tenth of his or her monthly wages (Article L224-3 (2) of the Labour Code).