The aim of this thesis is to provide an overview of the legal matter on damage liability in employment relationships. Since a significant portion of the matter of damage liability in employment relationships is regulated by the Croatian Labour Act, the thesis provides a systematic overview of the clauses of said act relating to damages, but also encompasses other regulations that deal with employment relationships. Most of the thesis deals with the issue of employee liability for damage inflicted on the employer, and thus with the relevant regulations for the prescribed amounts of damages, employee damage liability, as well as situations in which it is possible to reduce such liability or exonerate the employee of it. Furthermore, the thesis deals with the issue of relationships in which an employer is liable to the employee for damage suffered at work or in relation to work, as well as with bases for exoneration. Finally, the thesis touches on special liability situations defined by the Croatian Labour Act. Extant theoretical views and relevant legal practices are taken into account in analysing and discussing said issues.