In December 2018, the Supreme Court of the Russian Federation summarized court practice on the liability of an employee for damage caused to his/her employer.

To ensure consistent judicial practice, the Supreme Court stated that the following legal aspects should be taken into account when handling cases on compensation of damages:

Burden of proof

One of the main contractual duties of an employee is to treat his/her employer's property with care; this includes the property of third parties held by the employer if the employer is responsible for the safekeeping of this property. Thus, before deciding on compensation for damages by specific employees, an employer is obliged to conduct an investigation and seek the employee's written explanations. This applies also if the employment of the employee concerned has been terminated.

The Supreme Court stresses that the employer has the burden of proof to demonstrate that the procedure for holding the employee liable is followed.

Reduction of liability

The Supreme Court also indicated that the general provisions of civil legislation are not applicable to agreements on voluntary compensation of damages by an employee. Thus, the respective agreements must comply with Russian labor legislation.

The Supreme Court pointed out that the amount of damages due to an employer can be reduced by a court not only in response to an application by the employee concerned but also at the initiative of that court. However, the Supreme Court reminded that there are cases provided for by law in which the damages cannot be reduced, for example if the damage was caused by a crime committed for mercenary purposes.

Choice of jurisdiction

All disputes, regardless of the amount in question, with respect to claims for an employee's liability for damages caused to his/her employer must be filed with and adjudicated by the relevant district court. This also applies to claims which amount to less than RUB 50,000 (approx. EUR 660) and which would otherwise be adjudicated by a magistrate's court according to general civil procedure rules.

The Supreme Court concluded that employment contracts cannot include a provision stating that disputes for the recovery of damages from an employee are adjudicated at the location of the employer's registered office. A claim for recovery of damages from the employee can be filed either at the location of the employee's residence or at the place of execution of the relevant employment contract.

Limitation period

The employer must file a claim with the court for compensation of damages within one year. This one-year period is calculated from the day the employer discovers the damages. Investigation of a criminal case against an unidentified person, and not against a particular employee, in connection with the damages cannot be considered a reason to recommence the limitation period.

Source: Review of court practice on the liability of an employee approved by the Presidium of the Supreme Court of the Russian Federation on 5 December 2018

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