Can you charge employees for damaged equipment?

Employees are increasingly expecting their organisations to provide phones or laptops – but what happens when that equipment is cracked, damaged or lost – can HR recoup the costs?

“There is an implied indemnity in every employment agreement which means the employer is responsible for the damage, harm or loss that’s caused in the ordinary course of employment by the employee,” says Hamish Kynaston, partner with Buddle Findlay.

“So if something happens and the employee is not really at fault, it’s just one of those things and the employer wouldn’t generally be able to recover for that.”

However, Kynaston says the situation is slightly different if the employee has deliberately or negligently damaged equipment.

“If the employee has been negligent and has cost the employer a whole lot of money, it is arguable, you might be able to bring a claim against your employee in those circumstances,” says Kynaston. “Employers don’t generally but it could be a very expensive piece of equipment and you might.”

If employers are concerned about the potential cost they could incur if an employee damages expensive material, Kynaston says specific provisions in the employment agreement are the best form of protection.

“Some employers have really specific provisions – particularly where employees are using expensive equipment, vehicles or highly technical machines – where they make it really clear that if the employee is negligent or damages something wilfully or recklessly then the employee can be liable for those costs and in those circumstances the employer has a right to recoup those costs,” he explains.

While provisions in the employment agreement do provide some form of protection to employers, Kynaston warns that they’re certainly not fool proof.

“It’s often argued,” he admits. “It’s not like you can just deduct the number, you’d generally have to write to the employee, ask them to pay a certain amount and if he or she disputes it then you’d have to sue – which not a lot of employers do but in rare cases you see it.”