What is an employer’s recourse in the event of damages caused by an employee’s negligence

The highly regulated employment relationship between employers and employees is appropriate when one considers the roles and responsibilities that accompany it.

Simply put, employees offer a service, and in turn, employers compensate employees for such service.

In this article we will consider the recourses available to employers for damages or losses incurred as a result of an employee’s negligence in the execution of such service.

What is employee negligence?

Negligence occurs when an employee’s actions differ from actions which a reasonable person would have adopted in the same circumstances. Negligence by an employee may not always be wilful or intentional, but rather forces an employer to determine whether a reasonable person would have foreseen the possibility of harm being incurred and whether a reasonable person would have taken the necessary steps to prevent such harm.

Disciplinary action taken against an employee

Employers are obliged to enforce certain rules to ensure a harmonious and efficient workplace culture.

Unfortunately, regardless of the level of management or oversight, misconduct is unavoidable. It is therefore vital that employers enforce the rules, especially when it comes to serious offences such as theft, dishonesty, negligence or fraud. These offences not only impact the trust relationship between the employer and employee, but can also result in severe financial loss.

In many instances, employers will risk creating precedents in terms of internal disciplinary sanctions by not adhering to their disciplinary code for serious offences by issuing the employee with a final written warning as opposed to dismissal to allow the employer to recoup some of the losses through deductions.

Deductions from employee remuneration

Employers often suffer financial losses as a result of the negligence or misconduct of an employee. These instances can range from accounting errors to motor vehicle accidents. Fortunately, provision has been made for employers to make certain deductions in these circumstances.

Section 34 of the Basic Conditions of Employment Act (‘BCEA’) provides that employers may make any deduction from an employee’s remuneration for debt incurred, provided that the employee has agreed to such deduction, or if such deduction is permitted in terms of a law, a collective agreement, court order or arbitration award.

Section 34(2) of the BCEA goes further to provide for instances where the deduction is as a result of damage or loss (i.e. misconduct). In such circumstances, an employer may make a deduction from an employee’s remuneration only if the–

• damage or loss occurred in the course of employment and was the employee’s fault;
• employee was given an opportunity to make representation as to why the deduction should not be made and the employer has followed a fair procedure;
• total deduction does not exceed the actual amount for the loss or damage; and
• total deduction does not exceed 25% per month.

Employers need to be aware that any deduction for a debt or losses due to damage must be agreed to by the employee. It will be sufficient if an employment contract makes provision for such instances.

Laying criminal charges and/or instituting civil litigation

Employers further have the right to lay criminal charges or institute a civil action against employees for damages or losses incurred. It is important to differentiate between laying criminal charges and proceeding with civil litigation. Institution of a civil claim would usually follow instances of negligence, gross dereliction of duty or mismanagement, whereas criminal charges are usually laid following instances of theft, fraud or corruption.

As with any natural person, companies have the right (and responsibility) to safeguard their interests and utilise the recourses available to them. Civil litigation will usually follow where employers have suffered substantial losses and wish to recoup those losses from an employee. This will also be the case where the employer is unable to make deductions due to the employee being dismissed or in the event of the employee resigning. Unfortunately, employers seldom make use of these legal recourses due to the time and cost implications. 

Double jeopardy

There is a common misconception that disciplining an employee and making deductions for such losses or damages incurred as a result of an employee’s negligence will be regarded as double jeopardy (meaning the employee is punished twice for the same incident – once by receiving a warning or being dismissed and once for being liable to pay back such losses).

It has been confirmed in many cases such as Solidarity obo Mohammed v Air Traffic and Navigation Services Ltd (2011) JOL 27921 (CCMA), that the recovery of losses is a common-law right of the employer and does not form part of the sanction at a disciplinary inquiry level. If the correct process is followed, employers will be able to discipline an employee and recoup some of the losses incurred.

Conclusion

Employers are often faced with a difficult decision: dismissing an employee and cutting its losses, or going against the code of conduct by giving a final written warning to allow for future deductions from the employee’s salary.

Employers are warned against less severe sanctions for serious offences in an attempt to recoup damages. A less severe sanction for one employee can result in a precedent being created, even unknowingly, for future employees who commit the same offence. Employers should thus weigh the risks against the financial implications to best determine the way forward.

In recouping damages or losses, employers are reminded to stick to the letter of the law.

SERR Synergy has a professional team of labour law advisors across South Africa who have the experience and knowledge to ensure that employers are abreast of the requirements and the process to follow to minimise risk. Our legal team assists with the drafting of employment contracts or general agreements that allow for maximum deductions to be made, acknowledgements of debt, and the correct procedures to follow when disciplining employees for misconduct resulting in financial losses or damages.

About the Author: Bianca Harmse-Gouws is an advisor in the labour department of SERR Synergy’s Pretoria branch. She obtained a BA in Law, LLB, and LLM in Labour law from the University of Pretoria.

Sources Acknowledged:

Basic Conditions of Employment Act, Act No.75 of 1997

Solidarity obo Mohammed / Air Traffic and Navigation Services Ltd [2011] JOL 27921 (CCMA)