The Problems of the Employers’ Representative Material Liability in Labour Law
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Abstract
The status and problems of the Employers’ representative material Liability in Labour Law are shortly discussed in this publication. The general obligations of Employers’ representative, provided in variable Lithuania laws, including the main Civil code, are observed. As an object of research is a head of most popular companies form in Lithuania – closed Joint Stock Company. Peculiarities of applying the laws of material Liability in practice are indicated. The separate cases of Employer’s representative material Liability are provided. The article is prepared under comparative method of study, analyzing the new Labour Code of Republic of Lithuania, issued on 2002. The questions of Employers’ representative material Liability are not enough analyzed in law doctrine. They also deemed to be actual in practice. The rulings of Juridical Board of Civil Cases Department of Supreme Court of the Republic of Lithuania dealing with Employers’ representative material Liability are provided. There are made conclusions at the end of the Article, revealing problems of employers’ representative material Liability arising in practice.
The main aspect of the publication is to observe status and liability of a person, who is a head of a legal person and works as ordinary employee in accordance with labour contract, but his rights and duties are specific. The status of a director of a company is double-faced. From one side, he is an employee and do the job of administration of a company’s activity, from the other side – he has powers and duties, which are specific comparing with others employees. There are obligations called “Duty of care”, “Business judgment rule”, which are applied only to head persons. In that case the liability of such persons should be also regulated specifically. Hereby, Employers’ representative liability shall be incurred due to a violation of law during which a head of a company causes damage to Employer through non-performance of work duties or by performing them unsatisfactorily. Liability shall be incurred when all the following conditions are present: 1) damage has been caused; 2) damage has been caused through illegal activity; 3) there is a causal relationship between an illegal activity and damage; 4) the offender is guilty; 5) the offender and the victim were in a labour relationship during the violation of law; 6) the resulting damage relates to work activities. The main issue is to define what kind of legal relations are between company and directors – civil or labour. There are two kinds of employees’ material liability in labour law – full and limit. An employee must compensate all damage caused but not in excess of the amount of his three average monthly wages, with the exception of cases specified below: 1) damage was caused deliberately; 2) damage resulting from a criminal act of the employee determined according toe the procedure laid down in the Criminal Code; 3) damage caused by an employee with whom a contract of full liability has been concluded; 4) damage resulting from the loss of instruments, clothes, protective equipment issued to the employee for use at work, also from the loss of materials, sub-products or products in the course of the production; 5) damage caused in any other way or to any other property full liability for which is provided in special laws; 6) damage caused by an employee under the influence of alcohol or narcotic or toxic substances; 7) where this is provided for in a collective agreement. New Law on Companies provides that a contract of full liability may be concluded with the director of the Company. So, if such contract is not concluded, the liability should be limit. In accordance with Judicial practice -Juridical Board of Civil Cases Department of Supreme Court of the Republic of Lithuania has made decision that between a director and a company are civil relations, despite of labour contract made between parties. In the opinion of the author a liability of a Employers’ representative shall be full, because of its specific status, and new Law on Companies does not guarantee a security of third persons and participants of the company. The amount of the damage to be compensated shall comprise direct losses and the income, which has not been received. Another special case is that Employer shall compensate damage caused by the Employers’ representative to third persons when the employer acquires by the right of recourse due to the compensation of damage caused by an employee. Hereby, it could be situation that Employer will fail to recourse the compensation, because an employee must compensate all damage caused but not in excess of the amount of his three average monthly wages, with the exception of cases specified in Labour Code and Law on Companies.
The main aspect of the publication is to observe status and liability of a person, who is a head of a legal person and works as ordinary employee in accordance with labour contract, but his rights and duties are specific. The status of a director of a company is double-faced. From one side, he is an employee and do the job of administration of a company’s activity, from the other side – he has powers and duties, which are specific comparing with others employees. There are obligations called “Duty of care”, “Business judgment rule”, which are applied only to head persons. In that case the liability of such persons should be also regulated specifically. Hereby, Employers’ representative liability shall be incurred due to a violation of law during which a head of a company causes damage to Employer through non-performance of work duties or by performing them unsatisfactorily. Liability shall be incurred when all the following conditions are present: 1) damage has been caused; 2) damage has been caused through illegal activity; 3) there is a causal relationship between an illegal activity and damage; 4) the offender is guilty; 5) the offender and the victim were in a labour relationship during the violation of law; 6) the resulting damage relates to work activities. The main issue is to define what kind of legal relations are between company and directors – civil or labour. There are two kinds of employees’ material liability in labour law – full and limit. An employee must compensate all damage caused but not in excess of the amount of his three average monthly wages, with the exception of cases specified below: 1) damage was caused deliberately; 2) damage resulting from a criminal act of the employee determined according toe the procedure laid down in the Criminal Code; 3) damage caused by an employee with whom a contract of full liability has been concluded; 4) damage resulting from the loss of instruments, clothes, protective equipment issued to the employee for use at work, also from the loss of materials, sub-products or products in the course of the production; 5) damage caused in any other way or to any other property full liability for which is provided in special laws; 6) damage caused by an employee under the influence of alcohol or narcotic or toxic substances; 7) where this is provided for in a collective agreement. New Law on Companies provides that a contract of full liability may be concluded with the director of the Company. So, if such contract is not concluded, the liability should be limit. In accordance with Judicial practice -Juridical Board of Civil Cases Department of Supreme Court of the Republic of Lithuania has made decision that between a director and a company are civil relations, despite of labour contract made between parties. In the opinion of the author a liability of a Employers’ representative shall be full, because of its specific status, and new Law on Companies does not guarantee a security of third persons and participants of the company. The amount of the damage to be compensated shall comprise direct losses and the income, which has not been received. Another special case is that Employer shall compensate damage caused by the Employers’ representative to third persons when the employer acquires by the right of recourse due to the compensation of damage caused by an employee. Hereby, it could be situation that Employer will fail to recourse the compensation, because an employee must compensate all damage caused but not in excess of the amount of his three average monthly wages, with the exception of cases specified in Labour Code and Law on Companies.
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