It is quite common for employers to suffer financial losses for employees’ wrongdoings in the course of their duties, which can trigger non-compliance or disrupt a company’s labour management. Far less common, however, is for those employers to successfully claim economic compensation from their delinquent employees. This article analyses why that is, and what companies can do to turn the situation around.

Why the difficulty?

For starters, employers must furnish effective evidence to prove actual economic loss to win such a lawsuit. Employers may have missed the window for preserving evidence. Losses may also prove difficult to identify or prove due to the often complex and diverse nature of the employer’s business or industry.

Additionally, employers may be hampered by many other issues: difficulty in proving misconduct or gross negligence, the ill-defined scope of the employee’s liability, or concealment of the employee’s actions making it difficult to establish a correlation between the wrongdoing and economic loss. Many employers simply lack experience in such cases, leading to inadequate early preparation and failure to produce sufficient evidence. Mishandling at any of these critical junctures may lead to eventual defeat.

Atmi Austar Packaging Technology (Beijing) faced this predicament in its 2019 lawsuit, claiming gross negligence or deliberate misconduct by one of its employees but being unable to produce evidence deemed adequate by the court. Given the absence of...

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