On January 23, 2024, the Hamm Regional Labor Court (case no.: 6 Sa 1030/23) issued a fundamental ruling on the continued provision of a company car for private use.
This legal dispute resolved the question of whether an employee can retain the right to use their company car for private purposes. This decision could have significant implications for similar cases in employment law practice.
The present legal dispute concerned the provision of a company car for private use.
I, the plaintiff, have been employed by the defendant since February 1, 2009, and most recently earned a gross annual salary of approximately €130,000, including a non-cash benefit of €1,119 gross per month. In 2015, I signed an employment contract that placed me as a sales manager in the marketing and sales department. However, the contract did not contain any provisions regarding the provision of a company car. However, a supplementary agreement provided me with a function-dependent company car.
In 2021, the contract was amended, so that I began working as a regional sales manager in July. The agreement provided for me to be granted a company car, dependent on my role, provided company regulations permitted it. Upon termination of my employment, the benefit would cease, and the defendant reserved the right to revoke the company car if there was a valid reason.
Since February 2023, I have been working as a sales partner manager for individual customers without any contract changes. The company car was still provided to me. During an inspection in March 2023, the defendant determined that I did not meet the required business absence requirement of more than 50 days. The defendant then requested that I return the company car by December 31, 2023, at the latest.
I filed a lawsuit to enforce the transfer of the company car for private use beyond December 31, 2023.
The Hamm Regional Labor Court (LAG Hamm) ruled in my favor, stating that the defendant must also provide me with a company car for private use beyond December 31, 2023. While the Dortmund Labor Court dismissed the claim, the Hamm Regional Labor Court considered my claim to have not expired. The provision of a company car for private use is part of the employee's remuneration and is therefore owed as long as the employer is required to pay remuneration.
A claim to the company car would only expire if there was a validly agreed condition subsequent or a valid right of revocation. The Hamm Regional Labor Court (LAG) determined that my claim had not expired due to a condition subsequent pursuant to Section 158, Paragraph 2 of the German Civil Code (BGB). The relevant clause regarding "permanently high mobility" was non-transparent and therefore ineffective. It remained unclear when "permanently high mobility" could be denied, how the 50% working day quota is calculated, and which trips should be taken into account.
The court also deemed the cancellation clause invalid. This allowed the defendant to revoke the company car for reasons that were unreasonable for me. Although the employer has a legitimate interest in flexibility, the financial risk cannot be shifted onto the employees. The clause permitted revocation for organizational reasons, such as changes in contractual duties. However, not every change in job duties justifies the withdrawal of use of the company car.
In addition, the defendant did not comply with the contractually stipulated two-year review period.
Therefore, the Hamm Labor Court ruled in my favor and confirmed my right to use the company car for private purposes as well.
Contractual provisions regarding the provision of company cars, including for private use, are often the cause of labor law disputes. The ruling by the Hamm Labor Court makes it clear that cancellation clauses must meet strict requirements for effectiveness. As an employer, I should therefore exercise particular care when drafting such clauses.
It is advisable to agree on a right of revocation in connection with the provision of a company car, including for private use. In doing so, I must ensure that the employer's legitimate interest in being able to revoke the provision of the company car during an ongoing employment relationship is clearly and legally soundly formulated. The contractual provisions must comply with the requirements of general terms and conditions law.
The trend in labor courts shows that the provisions of Sections 305 et seq. of the German Civil Code (BGB), in particular the transparency requirement (Section 307, Paragraph 1, Sentence 2 of the BGB), continue to be strictly applied. I should therefore ensure transparency and clarity in my contractual clauses to prevent legal conflicts.
Do you have a conflict with your employer regarding the use of a company car? As an employment law attorney, I'm happy to assist you!
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