Inventory liability

It can be determined that the amount of capital tied-down in the case of both trading and even producing companies is significant, which means deficit-free management is a fundamental interest of responsible owners and managers, and an important condition and tool for deficit-free management is inventory. The question arises of who is responsible if a shortage is identified by the inventory. Is it the employer’s fault or the employee’s?

 

Inventory shortages

To determine the question of liability, it is first necessary to clarify what we mean by inventory shortage. First of all, it is necessary to note that not all stock shortages qualify as inventory shortages.

Conditions for classifying a shortage an inventory shortage:

  • Must originate from inventoried stock correctly handed and taken over
  • It has to result from an unidentified reason (for example, shortages due to theft or damages are NOT considered inventory shortages)
  • It has to exceed distribution losses (the natural decrease in quantities, called spoilage or net, and losses due to handling)

 

The employer may determine an actual inventory shortage based only on an inventory taken in line with the inventory rules and performed on the entire inventory stock.

 

Inventory liability agreement

The Labour Code provides an exact definition for the liability to be borne for inventory shortages. To enforce liability, the employer and the employee have to have entered into an inventory liability agreement for the given inventory period.

The criteria for the validity of a suitable inventory liability agreement:

  • written agreement (verbal agreements are not valid!)
  • the specification of the stock for which the employee is responsible
  • the employee has to perform work in the given position for at least half of the inventory period

 

It is a little difficult to agree with the last point, as it puts liability on the store manager, warehouse manager, etc. for something that he/she was unable to determine.

That is why it is recommended to perform a comprehensive inventory when replacing any manager, so both the outgoing and the incoming manager can perform their work with certainty and without any worries. It is recommended to have the inventory taken when a change in managers occurs performed by an outside, third party to ensure that employees do not express their “feelings” in connection with the change through the quality of stocktaking…

If the inventory is managed by more than one employee, it is recommended to draw up a written group inventory liability agreement. In this case, don’t forget to have all responsible employees sign the document! For example, if only the head of the unit signs it, he/she will solely liable for a possible inventory shortage. If the inventory stock is also handled by other than responsible employees, the written consent of the responsible employee is required for employing a non-responsible employee.

If the employee moves to another position where he/she is no longer required to handle the stock, the agreement will be automatically terminated.

 

Limit of financial liability

The employee may manage the stock independently or together with other employees. If the employee is managing the stocks alone, he/she will be responsible for the full amount of the inventory shortage; however, if others are also handling the stocks, liability may not exceed 6 months’ absence fee. In case of a group agreement, the liability may not exceed the total amount paid for 6 months of paid time off for all employees in question.

As a general rule, the employer has to inform the person in question of its claim for damages within 60 days of completing the stocktaking.

 

By: Eszter Puskás & András Takács