Denied Access to Official Vehicle without Receiving Compensation
In a landmark case currently pending at the Federal Labor Court, an employee is challenging the withdrawal of a company car with private usage rights that was recalled during a company merger in 2021. The employee, who had been using the car since 1996, is suing the new employer for a monthly compensation payment.
However, the Cologne Higher Labor Court saw no claim to the initial compensation sum of 600 euros. According to labor law specialist Volker Görzel, the new employer's works agreement did not grant the employee a claim to the car.
Under German labor law, employees who have been granted a company car with private usage rights over a long period may have certain legal expectations and rights regarding the withdrawal of this benefit. However, there is no explicit statutory right to continue using the car indefinitely once the employer decides to withdraw it.
The provision of a company car for private use is considered a non-cash benefit, which is taxable for the employee. The right to a company car generally arises from the employment contract or company agreements, and long-term use might create an expectation, but the employer typically retains the right to revoke private use at their discretion, unless otherwise stipulated in the contract or collective agreements.
If the company car usage is a discretionary benefit and not contractually guaranteed, the employer can withdraw this benefit without owing additional monetary compensation to the employee. However, where the benefit had been contractually assured or is part of remuneration, withdrawal might be challenged and could constitute a change of working conditions requiring agreement or compensation.
Employees impacted by withdrawal may claim that removing the car without adequate compensation or agreement is a detrimental change to employment terms. This might lead to disputes requiring negotiated compensation or court assessment. However, this depends on contract terms and company policies.
In this particular case, the plaintiff unsuccessfully appealed for future compensation payments at the Cologne Higher Labor Court. Each month without the company car, initially compensated with 300 euros, in this case, two months.
The ruling from the Cologne Higher Labor Court states that existing rights to a company car can expire, even if the employer changes, as long as there is an open reference to the works regulations in the employment contract. The new employer's works agreement did not grant the employee a claim to the car, as stated by labor law specialist Volker Görzel.
The works agreement can alter existing rights to a company car. If the employment contract or company car regulation clearly states when the car must be returned, this is legally justified, regardless of the reasons. The Cologne Higher Labor Court ruled that employers do not have to offer compensation if the works agreement states otherwise, in cases where employees lose their claim to a company car with private usage rights.
This topic is particularly relevant for employees with company car regulations in standard employment contracts. It underscores the importance of understanding the terms and conditions of employment contracts, especially when it comes to non-cash benefits like company cars. The case is expected to set a precedent for similar disputes in the future.
In this specific case, the plaintiff's claim for monthly compensation due to the withdraw of a company car with private usage rights was unsuccessful, as the new employer's works agreement did not grant such a claim. This incident highlights the significance of understanding the terms and conditions of employment contracts, particularly those pertaining to non-cash benefits like company cars, as failure to do so might impact future business and finance-related decisions.
