(1) An employee is required to compensate material damage caused to the employer, unless other is provided by this law or other regulatory enactments.

(2) Upon establishing the material responsibility, the damage subject to compensation does not include the profit lost by the employer as a result of an act committed by the employee.

(3) In cases when the material damage upon the employer is caused as a result of committing by the employee an act containing elements of a crime, responsibility shall be established in accordance with the Criminal Law.

(1) An employee is released from material responsibility if the damage is caused as a result of force majeure, confirmed in accordance with the established procedure, extreme necessity, necessary defense, fulfillment of a legal or contractual obligation, as well as a normal economic risk.

(2) Employees are not responsible for losses accompanying the production process, provided by the technological standards or current legislation, for losses caused as a result of unforeseen circumstances that could not be eliminated, as well as in other similar cases.  

(1) An employer has the right, taking into account the specific circumstances in which the material damage was caused, to refuse from its recovering in whole or partly from the guilty employee.

(2) Disagreements that have arisen between the employee and the employer in connection with the application of the first paragraph shall be considered in manner provided for the resolution of individual labor disputes (Articles 354 - 356).

For the damage caused to the employer, the employee bears material responsibility within the limits of his average monthly salary, unless other is provided by this law or other regulatory enactments.

(1) Full material responsibility of an employee consists in his obligation to compensate for caused material damage in full.

(2) An employee may be brought to the full material responsibility for material damage caused only in the cases provided in Article 338.

(3) Employees under the age of eighteen shall bear full material responsibility only for intentional damage, as well as for material damage caused in a state of alcoholic, drug or toxic intoxication, established in accordance with the procedure provided in point k) of Article 76, or as a result of committing crimes.

(1) An employee is in full amount financially responsible for damage caused through his fault to the employer in the following cases:

a) has been concluded an agreement between the employee and the employer about employee's full responsibility for failure to ensure the safety of property and other valuables transferred to him for storage or for other purposes (Article 339);

b) the employee received property and other valuables on the basis of a one-time power of attorney or other one-time documents;

c) the damage was caused as a result of deliberate culpable actions of the employee, established by the court decision;

d) the damage was caused by an employee in a state of alcoholic, narcotic or toxic intoxication, established in accordance with the procedure provided in point k) of Article 76;

e) damage was caused by the shortage, destruction or deliberate damage of materials, semi-finished products, products (production) including during their manufacture, as well as tools, measuring instruments, calculating equipment, protective equipment and other items issued to the employee for use by the enterprise;

f) the employee is entrusted, in accordance with the current legislation, with full material responsibility for damage caused by him to the employer in the performance of his labor duties;

g) the damage was caused not in the performance of the employee's work duties.

(2) Heads of the enterprises and their deputies, heads of the accounting services, chief accountants, heads of divisions and their deputies are materially responsible in the amount of damage caused through their fault, if this is a consequence of:

          a) illegal spending of material values ​​and money;

          b) expenditure (unjustified use) of investments, loans, grants, loans provided to the enterprise;

          c) improper accounting or improper storage of material values ​​and funds;

          d) other circumstances in cases stipulated by the current legislation.

(1) A written agreement on full liability may be concluded by an employer with an employee who has reached the age of eighteen and holds a position or performs work directly related to the storage, processing, sale (supply), transportation or use of the values ​​transferred to him in the labor process.

(2) The list of positions and jobs specified in the first paragraph, as well as the model of the agreement on full individual material liability, shall be approved by the Government.

(1) In case of common performance by employees of certain types of work related to the storage, processing, sale (supply), transportation or use in the labor process of the values ​​transferred to them, when it is impossible to delineate the material responsibility of each employee for causing damage and conclude an agreement with him on full individual material responsibility, collective (brigade) material liability can be introduced.

(2) Collective (brigade) material responsibility is established by the employer in agreement with the employees' representatives. A written agreement on collective (brigade) material responsibility is concluded between the employer and all members of the team (brigade).

(3) The list of works, of which performance collective (brigade) material responsibility can be established, the conditions for its application, as well as model of the agreement on collective (brigade) material responsibility, shall be approved by the Government.

(4) In case of voluntary compensation of material damage, the guilt degree of each member of the team (brigade) is determined by an agreement between all members of the team (brigade) and the employer. When establishing material damage by the court, the degree of guilt of each member of the team (brigade) is determined by the court.

(1) The amount of material damage caused to the employer is determined based on the actual losses calculated on the basis of accounting data.

(2) In cases of theft, loss, destruction or damage of the employer's property classified as fixed assets, the amount of material damage is calculated based on the book value (cost price) of material assets, taking into account the degree of wear and tear in accordance with the established norms.

(3) In cases of theft, shortage, destruction or deliberate damage of material assets, except the property specified in the second paragraph, the damage is established based on the in force prices of the relevant locality on the day the damage was caused according to statistical data.

(1) Prior to the issuance of an order (instruction, decision, resolution) on compensation for material damage by a specific employee, the employer is obliged to conduct an official investigation to establish caused damage amount and the reasons for its occurrence.

(2) In order to conduct an official investigation, the employer has the right to create, on the basis of an order (instruction, decision, resolution), a commission with participation of specialists in this field.

(3) Requesting an explanation from the employee in written form is mandatory in order to establish the causes of the damage. Refusal to provide an explanation is formalized by an act, which is signed by the employer's and employee's representatives.

(4) An employee has the right to familiarize with all materials collected in the course of an official investigation.

(1) An employee who is guilty of causing material damage to an employer may voluntarily compensate it, fully or partly.

(2) By an agreement between the employee and the employer it’s allowed to compensate material damage by an installment payment. In such a case, the employee must submit to the employer a written undertaking about voluntary compensation of material damage, indicating specific payment terms. If the employee who made such an obligation terminated the employment relationship with the employer, the unpaid debt is compensated in the way prescribed by the current legislation.

(3) With the written consent of the employer, the employee may compensate caused material damage by an equivalent property or by repairing the damaged one.

(1) Withholding of caused material damage amount from a guilty employee, not exceeding his average monthly salary, is carried out on the basis of an order (instruction, decision, resolution) of the employer, which must be issued no later than one month from the damage amount determination date.

(2) If the withheld damage amount exceeds the employee’s average monthly salary or the monthly term for issuing the order provided in point 1 has been missed, the withholding is carried out by the court decision (determination).

(3) If the employer does not comply with the established material damage compensation procedure, the employee has the right to apply to the court (Section XII).

(4) In the event of a disagreement regarding the material damage compensation procedure, the parties have the right to apply the court within one year from the date of damage amount establishing (Section XII).

(1) Material damage caused to an enterprise through the fault of its manager shall be compensated in compliance with the rules provided by this law and other applicable regulatory enactments.

(2) The owner of the enterprise decides whether it is necessary to compensate material damage by the head of the enterprise. The owner of the enterprise has the right to recover the amount of material damage caused by the head of the enterprise only on the basis of the court decision (determination).

(1) Taking into account the degree and form of the fault, the specific circumstances and the property status of the employee, the court may reduce material damage amount subject to compensation.

(2) The court has the right to approve an amicable agreement between the employee and the employer to reduce material damage amount subject to compensation.

(3) Reduction of the material damage amount subject to compensation by the employee or the head of the enterprise is not allowed if the damage was caused intentionally, which is confirmed in accordance with the established procedure.

Retentions from wages in case of material damage compensation caused by the employee are made in compliance with the provisions of Article 149 and other regulations.