Home > Topic > Corporate law > New case law trend: the director of the company shall be liable for the damage suffered by the employee in the event when the company went bankrupt
New case law trend: the director of the company shall be liable for the damage suffered by the employee in the event when the company went bankrupt

New case law trend: the director of the company shall be liable for the damage suffered by the employee in the event when the company went bankrupt

The Supreme Court of the Republic of Lithuania developed interpretation of provisions of the Tort law providing more guarantees to the employee injured at work in case when company (the employer) went bankrupt and extended regulations of company director liability. The Supreme Court found that in case of indirect liability (company is liable for the damages caused by its employees) and liquidation of such Company due to bankruptcy the damage incurred to injured person shall not be left because of Company bankruptcy. An employee who was injured at work shall have right to direct his request of damage compensation to the person who caused the damage. In this particular case it is the director of the Company. This interpretation is based on Principles of European Tort Law providing for liability for auxiliaries.

As to the merits of the case, the employee was injured at work and the director of the Company was found guilty for the criminal offence related to labor safety and failure to ensure safe conditions of work. The Company under the provisions of indirect liability was obliged to compensate the damage to the employee but the damage was not compensated because the Company went bankrupt. Therefore the injured employee requested liability of director of the Company to compensate damage. The director of the Company disputed his liability arguing that he is not the right defendant and that the liability to compensate losses ends with liquidation of the Company which is under indirect liability provisions liable for the damage caused by its employees.

To support mentioned interpretation the Supreme Court referred to provisions of recourse where the Company which compensated damage to the persons injured by fault of its employees shall have the recourse right to cover expenses it suffered. According to the Labor law regulations the employee shall compensate fully the expenses of the Company related to the compensation of the damage caused by its employees in case of criminal offence, therefore the Supreme Court found that the director who was found guilty for the criminal offence shall be liable for the damage caused thereby of injured employee in case when the Company (the Employer) goes bankrupt.

By Lina Šikšniutė-Vaitiekūnienė

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