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A new judgement may end a decade of debate - Liability of the employed managing director  -

A new ruling of the Curia has finally settled the long-lasting debate on whether the general rules of civil law or the provisions of the Labour Code apply to the liability for damages of the employed managing director. The interpretation difficulties have arisen from the single fact that the Labour Code – which refers to the applicable provisions of the Labour Code regarding the compensation for damages – does not contain any reference to the relevant section of the Civil Code, which establishes the general liability clause applicable to the managing directors in the event of contract breach.

The judgment published in 2023 stated that the liability of an employed managing director for damages is to be assessed according to the general rules of the Labour Code, meaning that the employer must prove

-           that the employee in such position did not act as expected in the given situation,

-           the damage and its amount, as well as

-           the existence of the causal link.

As per the reasoning of the new judgement, the Curia states that contrary to the provisions of the Labor Code, according to which the provisions of civil law apply to damages caused by an executive employee in the context of managerial activities, the Labour Code in force during the assessed damage does not refer to the rules of civil law, which leads to the partial turning of the burden of proof.