Understanding a Company's Losses When Employees Are Killed or Injured in a Traffic Accident
Traffic Accidents
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- Understanding a Company's Losses When Employees Are Killed or Injured in a Traffic Accident
- I want to consult about a traffic accident in the Yaizu, Makinohara, Yoshida, Omaezaki, and Fujieda area
- I want to know about a company's losses when an employee is injured in a traffic accident
- I want to claim the company's losses against the at-fault party.
Are you troubled by issues like these in Yaizu, Makinohara, Omaezaki, Fujieda, Shimada, Yoshida Town, or surrounding areas?
Yaizu Sogo Law Office offers a free initial legal consultation regarding traffic accident concerns. There is no obligation to retain our services after the initial consultation. We are also available on weekday evenings and Saturdays. Please feel free to contact us by phone or email.
1 Classification of a Company's Losses When Employees Are Killed or Injured
Losses incurred by a company when employees are killed or injured in a traffic accident can be broadly classified into the following two categories.
(1) Losses arising when the company is forced to bear additional costs or suffers reduced profits due to the absence of employees or directors
These are referred to as "replacement costs," "productivity decline losses," or "opportunity losses," and typically include the following:
- Cost of temporarily hiring replacement employees
- Overtime and holiday work premiums paid to other employees
- Revenue decline due to suspension of on-site operations or sales activities
- Losses from overall business stagnation when the victim is a manager (e.g., store manager or officer)
In judicial practice, courts tend to recognize such losses particularly "when the employee is irreplaceable (e.g., specialists, managers)."
(2) Losses arising when the company paid the employee's full salary despite the employee being on leave
Under the Labor Standards Act, a company has no obligation to pay salary to an employee who is absent from work. However, it is not uncommon for a company to pay full salary during leave under its employment rules, customary practices, or social norms.
The question is whether this "salary borne on behalf of the employee" can be claimed against the at-fault party.
2 Judicial Decisions in Practice
(1) Regarding "Replacement Costs" and "Productivity Decline Losses" Incurred by the Company
Regarding (1) above, the Supreme Court ruled on November 15, 1968 (Showa 43) that:
- (a) Actual authority was concentrated in the individual victim,
- (b) The victim was irreplaceable as an organ of the company,
- (c) There was economic unity between the company and the victim,
were significant factors, and allowed the claim for damages.
Since this Supreme Court ruling, judicial practice has recognized damages where economic unity between the victim and the company is established based on the aforementioned factors.
Examples Where Economic Unity Is Likely Recognized
- Officers and representative directors
- Store managers and supervisors
- Highly specialized professionals (engineers, medical professionals, technicians)
- Cases in small and medium-sized enterprises where no replacement personnel are available
In such cases, the personnel costs of replacement workers, overtime pay, and similar expenses are more likely to be recognized as damages.
(2) "Salary Borne on Behalf of the Employee"
Regarding (2) above, although legal constructions vary, many court decisions have allowed damage claims by companies that bore the loss, to the extent that the victim's damages are recognized. The typical content of such damages is the salary paid by the company to the employee during the leave period; however, the full amount is not always recoverable. Please consult an attorney for detailed calculation methods.
Reasons Why the Full Salary May Not Be Recognized
- Normally, employees receive salary as "compensation for providing labor services"
- During leave, since no labor services are provided, the extent to which this constitutes the company's loss requires case-by-case determination
- In some cases, recognition is based on "the equivalent of 60% of the average wage"
As such, the full amount of salary paid by the company cannot always be claimed as-is, and expert judgment is required.
3 Summary
When an employee or director is injured in a traffic accident, the company may have losses that can be claimed against the at-fault party.
In particular, in small and medium-sized enterprises, a single employee's accident can have a significant impact on overall business operations.
Expert judgment is required to determine the extent to which costs borne by the company can be claimed. If the at-fault party's insurance company has rejected your claim for the company's losses, or if you would like an explanation of how damages are calculated, please consult our office.
Frequently Asked Questions
Can the company claim the full amount of salary it paid?
It depends on the individual case, but in some cases the amount may be limited to a portion.
Can the company claim the personnel costs of hiring a replacement?
It may be possible. Such claims are more likely to be recognized especially when the employee is in a managerial or specialized position with low replaceability.
What is the relationship between the employee's claim and the company's claim?
Both claims can be pursued simultaneously. It is necessary to ensure that they do not contradict each other.
What is the relationship with workers' compensation?
Whether the amount paid through workers' compensation should be deducted requires case-by-case determination. Please consult with us.
What changes when you engage an attorney?
By properly substantiating the company's losses, the claimed amount may change significantly.
The Initial Legal Consultation for Traffic Accidents at Yaizu Sogo Law Office Is Free of Charge
Yaizu Sogo Law Office provides a free initial legal consultation regarding traffic accidents.
We handle all traffic accident-related legal matters, regardless of severity or whether they involve property damage or personal injury. If you are feeling stressed by dealings with insurance companies, or if you want to know whether the amount offered by your insurance company is fair, please do not hesitate to consult with us.
Yaizu Sogo Law Office is available not only during regular weekday hours but also on weekday evenings and Saturdays. Please contact us by phone or email to schedule a legal consultation.
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If you are facing issues with traffic accidents, debt restructuring, or inheritance:You can consult a lawyer for free
At Yaizu General Law Office, free legal consultations are available for those facing traffic accidents, debt restructuring, or inheritance issues. There is no obligation to retain our services after a free consultation. For other areas of law, consultations are available at 5,500 yen (tax included) per 30 minutes. Please do not hesitate to contact us if you need assistance.
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