Fife Council has paid out more than £5m in compensation claims since 2007 - the highest amount of any local authority in Scotland bar one.
Only Falkirk Council has forked out more in the last five years.
Its bill came to £6m, while Glasgow City Council wrote off just £660,000 in the same period.
The figures were released in a Freedom of Information request by the Scottish Conservative Party.
They revealed that Fife Council paid out £5,259,000 in compensation between 2007 and 2012.
Claims included a Council employee who got £186,569.32 after they were assaulted at work.
Another staff member got over £130,000 because of poor working conditions.
The Council also made payments totalling £453,163.67 to members of the public who had been affected by defective footways and cycleways in the Kingdom.
And over £466,000 was paid out in third party vehicle insurance claims.
Brian Livingston, executive director of finance and resources, said the Council must take responsibility when people are injured, or property is damaged through the fault of its employees or the authority.
“As Scotland’s third largest council we invest over £1 billion per year in providing services,” he said.
“The vast majority of the time our employees perform to an exceptionally high standard but in such a large and complex organisation things will sometimes go wrong.
“If someone is injured or has their property damaged through the fault of the Council or its employees we have both a legal and a moral responsibility to compensate them for this.
“At the same time we have a duty to make sure we only pay compensation out of public funds if we are legally required to do so.
He continued: “We investigate all claims and every year about two thirds of claims result in no payment.
“Reflecting on the diverse range of figures we would question whether these have been compiled on a like for like basis.”
Together, Scotland’s local authorities have paid out more than £33 million since 2007.