Employee liability for a company car under Czech labour law

1. The first is liability for the loss of entrusted items under Section 255 et seq. of the Czech Labour Code. Under this type of liability, the employee is liable for the loss of tools, personal protective equipment and other similar items that the employer has entrusted to him or her against written confirmation. This liability cannot, however, be established for all items the employee comes into contact with, but only for tools, work equipment and other similar items. Legal practice agrees that machines, cars, workplace equipment and the like are not considered such tools. These may be smaller items that the employee uses continuously and whose protection would be difficult for the employer to secure effectively by its own measures (for example safety goggles, calculators, work clothing, footwear, a mobile phone, a laptop, etc.).

If the value of the entrusted item does not reach CZK 50,000, a written agreement on liability for the loss of entrusted items need not be concluded; written confirmation of receipt of the item(s) is sufficient. For an item worth more than CZK 50,000, a written agreement on liability for the loss of entrusted items must be concluded.

2. The second form of agreed liability is possible under Section 252 of the Labour Code: liability for a shortfall in entrusted assets that the employee is obliged to account for. The law gives only an illustrative list of the assets to which liability for a shortfall applies. These are valuables, cash, goods, stocks of material or other assets that are the subject of turnover or circulation. A characteristic feature of these assets is that they are intended for circulation or turnover, and at the same time they must be entrusted to the employee, who handles them himself or herself and subsequently accounts for them. An agreement on liability for a shortfall in entrusted assets must be concluded in writing. The assets need not be listed specifically in the agreement; by concluding it, the employee assumes liability for a shortfall in any further assets the employer entrusts to him or her at any time after the agreement is concluded.

In the cases of special employee liability described above, the burden of proof lies with the employee. The employee is released from liability if he or she proves that the shortfall arose through no fault of his or her own, in particular that the employer's neglect of its duties made it impossible to handle the entrusted assets; likewise, the employee is released from liability for the loss of entrusted items if he or she proves that the loss arose through no fault of his or her own. An employee who is liable for damage must compensate it in full.

As regards liability for damage to an entrusted vehicle, current Czech law permits only the employee's liability under Section 250 of the Labour Code. This is the employee's general liability for damage, where the burden of proof lies with the employer and the amount of compensation claimed is capped at four and a half times the employee's average monthly earnings, except where the damage was caused intentionally, under the influence of alcohol or other addictive substances, in which case the employee is liable for the damage in full. Even for damage caused in a traffic accident, the employee can be liable only on the basis of general liability under Section 250 of the Labour Code.

An agreement on liability for loss cannot be validly concluded for a car. According to established legal practice, a car is not regarded as a tool, item of personal protective equipment or similar item, so such an agreement cannot be validly concluded. Even if such an agreement were concluded with an employee, it would not be an effective legal instrument. An agreement on liability for the loss of entrusted items can at most establish the employee's liability for goods transported by the car.

The employee's specific rights and obligations when using a company car (e.g. a ban on private use, an obligation to park only in guarded car parks, etc.) may be agreed, for example, in an agreement on the use of a company car. Even in this case, however, the employee remains liable for any damage caused only under the general liability rules of Section 250.

Dealing with damage to a company vehicle or drafting a car-use agreement? Our employment law team can help.