Can I make an employee pay for damaged company property?
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Can I make an employee pay for damaged company property?

There can be many forms of company property; company cars, laptops, machinery, uniforms, the list goes on. Damages can hinder both employees and employers. Not only due to the costs, but because it may have an impact on their ability to do a job. Wasting time and money. There’s at least one way to minimise the costs, and that’s getting the money back. Well, can you make an employee pay for damages? This is what we’re here to answer.


How Can I Prevent Damages in the First Place

The main prevention of damage to company property is to establish a clear Company Property Policy. Policies are in place to protect the employee and employer. There may be specific policies for specific company property such as Company Cars.

Within the policy it’s important to highlight what is classed as intentional property damage or if accidental damage can be called negligence and what salary deductions (if any) may be applicable. This should also be included in the employment contract. If the employer cannot provide a signed agreement, then they won’t be able to deduct money from the employee, as this would be seen as an unlawful deduction of wages and could result in a claim against the company.

What The Policies Should Include

These policies should outline the rules employees must follow such as;

  • To ensure the correct use and maintenance of company property
  • the company reserves the right to pay part of or none of the costs to repair or replace damaged property
  • misuse or neglection of the property will be subject to disciplinary action.

For company cars the employee driver must sign a vehicle log report. They should note any problems with the vehicle before each use. This includes any damages to the vehicle.


So, what can I do if company property is damaged?

Irrespective of who is at fault, an employer may seek to have the employee pay for damages. However, it is important that employers ascertain who is accountable for the liability.

Employers will generally try to retrieve the cost of damages directly from the employee. But they can only do so when there is a clear contractual agreement and an agreement (between both parties) of the payment terms. If the employer has insurance, they should check to see if they can make a claim for the damage through it. Also, if they can claim and there is an access charge, they may agree that this is what the employee will pay back.

If an employee must pay damage costs, an employer must be fair and act reasonably. For example, employers can never claim back more money from an employee than the actual cost of the damage repayments. This is regardless of any agreement within the employment contract. Also the amount an employer deducts per pay period must be reasonable with respect to the employee’s earnings.

In a nutshell, you can deduct an employees pay for damage to company property. The correct procedure must be followed and the contract of employment must allow for it.


Can You Claim Damages from Ex-Employees?

In regard to ex-employees, it may be a little more difficult to claim back any money for damages. If their contract of employment has a deductions clause along the lines of ‘the Company reserves the right in the event of termination of employment, to deduct from your salary any overpayment made and/or monies owed to the Company by you including but not limited to damage or loss of the Company’s property caused by you’, then you are within your right to reclaim the money back for damages, ensuring that it is a reasonable and justified amount.

However, if you did not issue a contract or that wording is not within the employees’ contract of employment then it may be a little more complicated. If they are no longer employed with the company, then it will become a civil issue in which you will have to take your claim to a civil court. Whether this is something that is worth while to do is dependent on what the claim is, if you have followed and have evidence that you have followed a procedure and also if you have the time and resources to do this.


Still Struggling?

If you have some damaged company property, we will be able to advise you on making an employee pay for damages. Here at Wurkplace we can offer employment advice on issues such as this, provide our clients with a contract of employment template and tailor this to their needs. We also offer management training with our Level 7 CIPD qualified HRCs on HR Policies and Practices which will allow your managers to be fully equipped and knowledgeable regarding issues such as this. For more information on how we can help you, get in touch! You can contact us on our quick form, or speak to one of our experts directly: 0330 400 5490.


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