Who is Responsible for Damage to Company Property?

Company cars, laptops, uniforms; damage to company property can hinder both employees and employers.

Damages to a company aren’t solely monetary, as an employee may need specific equipment to fulfil their roles.

Damaged equipment can prevent an employee from completing their work. This costs the company in lost time and a reduced workload.

This doesn’t include the additional degradation that can be incurred from willful damage to company property. However, there must be proof that the property damage is intentional. 

In order to prevent damage to property or equipment, it’s in an employer’s best interests to establish good policies.

Damage to Company Property Policy Sample

Company property policies will help to establish important points. These include whether damages to company property merit deductions from employee salaries.

Many organisations have a policy to outline what is classed as willful property damage or if accidental damage can be called negligence.

And employees may have their salary deducted when damage to property occurs.

It is the duty of the employer to make their staff aware of company policy for such deductions from the outset. 

Every employment contract should include this information.

The employment contract forms a crucial reference point for an employer when asking a member of staff to cover the cost of any damages.

If the employer cannot provide a signed agreement then they won’t be able to deduct money from the employee. If they do, the employee is within their rights to take the employer to a tribunal for unlawful deductions.

A damage to company property policy template can feature many different statements. Below are some of the most common:

• All [Company Name] employees must maintain their work environment in an orderly fashion. 
• All [Company Name] employees must follow rules to ensure company property’s proper use and maintenance.
• [Company Name] property, including computers, cellphones, etc, is for business use only.
• Any employee that has neglected or misused [Company Name] property will be subject to disciplinary action. This includes termination. 
• [Company Name] reserves the right to pay part of or none of the costs to repair or replace damaged property. This applies if an employee misuses [Company Name] property. 
• Misappropriation of [Company Name] property is grounds for disciplinary actions. These include immediate termination and possible criminal action.

Certain company property merits its own specialist policies. These policies can cover company cars.

Damage to company cars

Specific policy templates for company cars establish how employees must handle company property. 

These policy templates include:

• Any employee must have authorisation and approval from [department name] to drive [Company Name] vehicles. Only those who drive as part of their essential job duties may drive [Company Name] vehicles.
• The employee driver must sign a vehicle log report noting any problems with the vehicle before each use. This includes any damages to the vehicle.
• The employee driver is responsible for the full operational condition of a [Company Name] vehicle before each use. 

These policies should be in place to protect both the employee and the employer. For example, in the event of any damages to the vehicle. A vehicle log report can act as supportive evidence of the original condition of the vehicle.

If any vehicles receive damages, they must receive repairs immediately or be taken out of circulation. Employers must remove any vehicle found to be unsafe from the operational fleet. Employees may only use the vehicle once appropriate repairs have been made.

In the event of a car accident, employees must file insurance claims to properly navigate the claims process. First, the company must submit a demand letter to the insurance company for property damage.

This a letter that is written to an insurance company seeking money for a claim. They can relate to personal injury or property damage. Regardless of the type or cost of the damage, it is vital to know how to handle any employee who has damaged property.

Addressing an employee damaging company property

Accidents happen and they can happen to anyone. However, deliberate employee damage to company property should be addressed.

The first step in the formal disciplinary procedure is a written warning. Or, a warning letter to the employee for damaging company property. Similar to a disciplinary, a warning serves as a way to reinforce company policies. 

Before any formal disciplinary actions, an informal discussion establishes how damages should be handled.

Disciplinary rules often contain a provision for employees that specifically relates to damages caused by neglect. It can state that damage caused to company property through neglect merits a disciplinary for the employee.

Protection against unlawful deductions

Regardless of fault, an employer may seek to have the employee pay for damages. However, it is important that employers establish this liability.

Employers will generally try to recoup the cost of damages directly from the employee. But, they can only do so when there is a clear contractual provision. 

A failure to have an employee’s liability written into their contract of employment can result in employee tribunals.

The Employment Rights Act 1996: Section 11 deals with protection against unlawful deductions.

• Employers cannot deduct money from an employee to cover the cost of damages with a clear, signed agreement with written consent.
• Unlawful deductions may lead the employee to take the employer to a tribunal.
• If it’s agreed in their contract, the employee must pay an accurate reflection of the cost of the damages. These costs can’t be an arbitrary penalty charge.

If an employee must pay damage costs, an employer must be fair.

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.

Employers must also act reasonably in respect to how much they deduct from their employees for property damage. The amount an employer deducts per pay period must be reasonable with respect to the employee’s earnings. 

What is 'reasonable' falls on a case by case basis and will depend on the particular employee. 

Need help?

Peninsula provides support with handling damage to company property. Get in touch with our expert team today. We take care of everything when you work with our HR experts.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.