You don't have to prove anything. The employee has to prove that you were negligent.
In theory, yes. The horrible practicality is that is not the case for small/medium claims (up to approximately €30K).
Ficticious example:
Employee/member of the public trips in a shop. Sprains ankle. Puts in a claim for personal injury.
Shop owner cannot find anything that the person fell over, floor is normal type, good condition, lighting good, etc. Certainly no way that a court of law would find the shop owner negligent.
However, the cost of defending the case in a court of law could easily be multiples of thousands. Solicitors fees, engineer fees, doctor's reports, consultant's reports, time spent dealing with the claim.
The "injured" person's solicitor may employ the tactic of "sending in an engineer" to look at the issue. This adds to the risk for the defendant when going to court - paying the "injured" persons costs is now greater.
Hence, an insurance company (bear in mind I am currently dealing with over a dozen personal injury cases for the company I work for) will often find it cheaper to "pay out" on the claim, even if it is dodgy. It is just palin cheaper for them to do so - and you cannot fault the logic. Unfair? Certainly. However, to do it "right" ultimately ends up in higher premiums.
Your insurance excess will also affect the way it is handled. An insurance company is much less inclined to fight a case where the insured person will likely have to pay all of the award out of pocket anyway. (little to no risk for the insurance company)
There are really only two reasons a personal injury case is challenged:
a) outright certain failure in court, including a high likelihoood the judge have the "injured" person's side pay the defendants costs. These cases are relatively rare (although to my delight I have a "customer" who is currently limping on his left leg - he injured his right leg allegedly!)
b)cases where the expected costs are going to be high and a court case may "pay off" some way in reducing the payout. These tend to be the more serious injuries with permanent and long term injuries.
Everything else will generally be settled, either with a bit of "horse trading" on the steps of the court, or else just let run through the PIAB system.
I know in your case there may not be an insurance company involved, but your solicitor/claims consultant will be able to advise you of teh pros & cons of any route you take.
As regards ability to pay being taken into consideration, it won't affect it in a court situation - they'll just assess what the injury is "worth".
However, should the "injured" person's solicitor come to relaise there is no money in the "pot", they may rethink taking on the case. No point in spending money to "win" a case, if there is no money to pay the bills at the end of it.
EB