Currently, our company is encountering a situation involving an employee's liability for property damage compensation. Specifically, during the performance of work duties, an employee inadvertently caused damage to company property, resulting in an estimated loss of approximately VND 20,000,000. So in the event that an employee causes damage to the company's property, what are the procedures for handling and requesting compensation as prescribed by current law? What steps should the company take to ensure compliance with regulations and avoid legal risks?
Answer
1. Legal Basis for Employee Liability for Property Damage Compensation:
According to Clause 1, Article 129 of the Labor Code 2019, An employee who causes damage to equipment or otherwise damages the employer’s assets shall have to pay compensation in accordance with labor laws or the employer’s internal labor regulations. If the internal labor regulations do not specifically stipulate, the liability for compensation will be determined according to the provisions of current law, specifically as follows::
- In case the damage caused by an employee is not serious, not deliberate and is worth less than 10 months’ region-based minimum wage announced by the Government, the employee shall have to pay a compensation of not more than his/her 03 months’ salary, which shall be monthly deducted from his/her salary.
According to Article 3 of Decree 74/2024/ND-CP, the Statutory minimum wages per month applicable to regions is prescribed as follows: region I is 4,960,000 VND, region II is 4,410,000 VND, region III is 3,860,000 VND and region IV is 3,450,000 VND. In the specific case where the employee causes damage estimated at about 20 million VND, it can be seen that this level of damage is lower than 10 months of the regional minimum wage in all regions. Therefore, according to current regulations, the employee is only responsible for compensating a maximum of three months of salary and this part will be deducted monthly.
- According to Clause 1, Article 129 of the Labor Code 2019, An employee who loses the employer’s equipment or assets, or consumes the materials beyond the set limits shall pay a compensation for damage in full or in part at the market price or as stipulated in the internal labor regulations or the responsibility contract (if any). In case this is caused by a natural disaster, fire, war, major epidemic, calamity, or another force majeure event which is unforeseeable and insurmountable, and all necessary measures and possibilities for avoidance have been taken, the compensation shall not required.
However, it should be noted that the consideration and decision on the level of compensation for damages must be based on the fault, the actual level of damage and the actual circumstances of the family, personal status and property of the employee. At the same time, it is necessary to comply with the regulations on procedures, processes and time limits for handling compensation for damages.
2. Conditions for salary deduction:
When compensation is executed through wage deductions, the employer must comply with all legal conditions to ensure transparency, including:
- An employer shall have the right to deduct from an employee’s salary only for the compensation for the damage to the employer’s equipment and assets in accordance with law.
- The employee has the right to be aware of the reasons for the deduction.
- Any monthly deduction shall not exceed 30% of the net monthly salary of the employee, after the payment of compulsory social insurance, health insurance, unemployment insurance premiums and personal income tax.
Legal basis: Article 102 of the Labor Code 2019.
3. Procedures for handling compensation for damages caused by employees to the company
Pursuant to Article 71 of Decree 145/2020/ND-CP, which stipulates the procedures for handling compensation for damages, specifically as follows:
- In cases where an employee causes damages or loses an asset assigned by the employer or otherwise causes damage to the employer’s assets or exceeds the consumption limit, the employer will request the employee to prepare a written report on the incident.
- Within the time limit for claiming compensation, the employer shall conduct a compensation hearing.
- Minutes of the compensation hearing shall be taken and ratified before the end of the hearing. The minutes shall bear the signatures of the participants as prescribed in Point a Clause 2 of this Article. In case a person refuses to sign the minutes, the minutes taker shall specify his/her full name and reasons for refusal in the minutes.
- The compensation decision shall be issued within the time limit for claiming compensation; specify the damage caused and the causes of damage; the compensation level; deadline and method of compensation payment. The decision shall be sent to the participants mentioned in Point a Clause 2 of this Article.
However, when handling the responsibility for compensation for damages to employees, employers need to pay special attention to the conditions on the statute of limitations and the subjects of handling according to the provisions of law:
- The time limit for claiming compensation is 06 months from the day on which the employee causes damages or loses an asset of the employer or otherwise causes damage to the employer’s assets or exceeds the consumption limit.
- Compensation shall not be claimed against employees during the periods in the cases: The employee is taking leave on account of illness or convalescence; or on other types of leave with the employer’s consent; The employee is being held under temporary custody or detention; The employee is waiting for verification and conclusion of the competent agency for acts of violations, stipulated in Clause 1 and Clause 2 Article 125 of this Labor Code; and The employee is pregnant, on maternal leave or raising a child under 12 months of age.
- No disciplinary measure shall be taken against an employee who commits a violation of internal labor regulations while suffering from the mental illness or another disease which causes the loss of consciousness ability or the loss of his/her behavior control.
In short, when employees cause damage to the employer's property within the prescribed scope, they will have to fulfill their compensation responsibilities. However, compensation handling must comply with the correct order, procedures and within the prescribed statute of limitations to limit legal risks and avoid unwanted disputes. In addition, it is necessary to objectively consider the actual circumstances of the employee to decide on the appropriate compensation level, thereby protecting the legitimate rights and interests of both parties.
