Millions in damages: Employee's liability is limited despite fault

An employee who causes millions of euros in damages through gross negligence is not required to pay full compensation. Even in such a case, liability can be limited, ruled the Cologne Regional Labor Court.

This article is part of the special feature on termination of employment: How to do it right

Employee liability is a recurring issue in the skilled trades. A recent ruling by the Cologne Regional Labor Court addresses this: Even if the employee is fully at fault , he is not obligated to completely compensate for the nearly three million euro damage . This is because the amount of damages was grossly disproportionate to his earnings.

The case

A long-serving sales manager at an energy supplier earned a monthly salary of approximately €8.400. In 2021, his incorrect decisions regarding electricity procurement resulted in losses of €2.793.028,25. His employer subsequently dismissed him without notice and demanded full compensation for the damages .

The judgment

The Cologne Regional Labour Court (LAG) upheld the dismissal without notice , but significantly limited the employee's liability to 202.399,92 euros.

The court applied the principles of employee liability in this case. A graduated system applies : employees are not liable without limitation for damages they cause at work, but only depending on the degree of fault. The amount of liability is tiered:

• slight negligence (such as an oversight in everyday work life): 
  The employee is liable not.
  
  
• Moderate negligence:
  The damage is usually shared proportionally between the employee and the employer.

• Gross negligence (e.g. gross disregard for safety regulations):
  The employee is liable full, whereby the maximum risk is usually capped at about one to three gross monthly salaries (so-called Protection against threats to one's livelihood).
  Any potential inherent risks of the work must be taken into account, as well as the extent of the damage and any risks factored in by the employer. Risks, risk coverage through an insurance policy that position The employee's position within the company and the amount of remuneration. Also, the employee's personal circumstances and the conditions of the employment relationship, such as its duration. Length of serviceHis age, family circumstances and previous behavior may need to be taken into account. 

• Intention:
  The employee must be responsible for the overall Damage will occur.

The employer generally bears the operational risk. Furthermore, the burden of proof lies with the employer : they must prove the employee's breach of duty and the precise degree of fault.

duties violated through gross negligence

The employee had clearly violated his employment obligations . The Regional Labor Court (LAG) therefore upheld the summary dismissal . The man had failed to insure the electricity he sold. This breach of duty was particularly serious because the scale of the contracts entailed a significant risk. He thus acted with gross negligence.

This raised the question of the extent of his liability. "The employee's contribution to the consequences of the damage must be determined by weighing all the circumstances , taking into account, in particular, the cause of the damage, its consequences, and considerations of fairness and reasonableness," explains Prof. Dr. Nicolai Besgen , a specialist lawyer for employment law.

Liability capped

"This means that even in cases of gross negligence, the employee cannot be exonerated," Besgen continued. "The Regional Labor Court (LAG) affirmed such exoneration in this case and deemed two years' salary as appropriate compensation. In doing so, the LAG focused primarily on the amount of the damage incurred. The plaintiff would not have been able to repay the damage, not even the accrued interest, before his retirement. His 23 years of unblemished service with the company were also taken into account. The LAG therefore considered it appropriate to reduce the damages to two years' salary."

Cologne Regional Labour Court, Judgment of 19 December 2024, Case No. 8 Sa 830/25

The advisors at the Chambers of Crafts will be happy to help you with any legal questions!

DHB now also available digitally! Simply click here and register for the digital German Crafts Journal (DHB)!