Employee Material Liability in Uzbekistan

When liability arises

Liability arises for damage caused by a culpable unlawful act or omission where there is a causal link between them (Article 318). The size of the damage is proved by the injured party — that is, the employer.

Only direct actual damage is compensated: a real reduction in or deterioration of the employer's property (including third-party property the employer is responsible for), plus excess costs of buying or restoring property and of compensating third parties harmed by the employee. Lost profit cannot be recovered from an employee (Article 337).

Liability is excluded if the damage resulted from force majeure, justified business risk, extreme necessity or self-defence, or if the employer failed to provide proper conditions for storing the property entrusted to the employee (Article 338).

The cap: average monthly wages

The general rule is limited liability: the employee is liable up to their average monthly wages unless the Code provides otherwise (Article 340). Average wages are calculated under Article 257.

Depending on the circumstances, the employer may waive recovery in full or in part (Article 339); the owner may restrict this right through legislation or the founding documents.

Full liability — compensation of the damage in full — is possible only in cases expressly provided for by the Code or other laws (Article 341). Employees under eighteen are fully liable only for intentional damage, damage caused while intoxicated, and damage resulting from a crime or an administrative offence.

Eight cases of full liability (Article 342)

• a shortage of valuables entrusted under a full material liability agreement;
• failure to safeguard valuables received under a one-off document — a power of attorney or a handover certificate;
• intentional damage;
• damage caused while under the influence of alcohol, drugs or toxic substances;
• damage from criminal acts established by a court;
• damage from an administrative offence established by a state body or a court;
• disclosure of state secrets or other legally protected secrets — commercial or official;
• damage caused while failing to perform job duties.

Directors and chief accountants

The head of an organisation, their deputies, the chief accountant and the head of a separate division bear full material liability for direct actual damage they cause to the organisation (Article 488). At the owner's request — the general meeting of participants or the supervisory board — they also compensate losses caused by their culpable actions, calculated under civil law.

Damage caused by the head is compensated on the basis of a decision of the owner or a body it authorises; if the head refuses to pay voluntarily, it is recovered through the courts (Article 349).

Full material liability agreement

• may be signed only with an employee who directly handles cash or goods; such an agreement with anyone else is invalid (Article 343);
• the employee must be at least eighteen; the agreement is signed on hiring or later, as a supplement to the employment contract;
• if a position requires such an agreement and the candidate refuses to sign, the employer may refuse to hire them;
• types: individual liability — valuables are entrusted to a specific employee; collective (team) liability — where individual responsibility cannot be separated in joint work with valuables;
• to be released from liability, the employee (or an individual team member) must prove they were not at fault;
• the categories of employees are listed in the collective agreement or, if there is none, set by the employer in agreement with the trade union committee; the model form and model list of positions are approved by the Ministry of Employment and Poverty Reduction;
• if no agreement was signed or it was signed with an ineligible person, the employee's liability is limited — full liability is possible only under items 2–8 of Article 342.

Procedure: inquiry, calculation, recovery

Before deciding on compensation, the employer must hold an internal inquiry to establish the amount and causes of the damage. A written explanation from the employee is mandatory; a refusal to give one is recorded in a statement with witnesses and does not prevent liability (Article 344).

The amount of damage is based on actual losses according to accounting records. For fixed assets — carrying amount less depreciation; in cases of theft, shortage or intentional destruction or damage — market prices on the day of discovery (Article 345). That is why stock counts and accurate accounting underpin any recovery.

An amount not exceeding average monthly wages is recovered by an employer's order issued no later than one month after the damage is discovered. If the amount is larger or the month has passed, recovery is only through the courts (Article 347). A court may reduce the amount based on fault and the employee's financial situation, except for damage from a crime committed for gain (Article 350).

Payroll deductions are subject to an overall cap: all deductions from each payment may not exceed fifty percent of the wages actually accrued (Article 270). The employee may also compensate voluntarily, including in instalments under a written undertaking or by handing over equivalent property (Article 346).