Seizure of Vehicle Without Compensation?
### Company Car Benefits: A Review of the Legal Landscape in Germany
In Germany, the private use of a company car is a common employment benefit, often outlined in the employment contract or a separate agreement. However, the terms under which the car may be taken away and any related compensation depend on what is specified in the contract and the reason for withdrawal.
#### When Can the Company Car Be Taken Away?
Employers can stipulate in the employment contract that private use of the company car is revocable under certain circumstances. If such clauses are clearly stated and lawful, withdrawal would not be considered a breach of contract.
Other reasons for taking away a company car can include operational changes, termination of employment, or changes in the employee's ability to drive due to health issues or non-compliance with regulations.
#### Potential for Compensation
German law does not provide a general legal entitlement to compensation if a company car with private usage rights is taken away during ongoing employment, unless the contract specifies otherwise. The company car is considered a voluntary benefit, not a core employment right.
In some cases, employers may offer severance pay, but this is not specifically for the loss of the company car benefit; it is linked to the termination of employment itself. If the employer withdraws the company car benefit without contractual justification, this could constitute a breach of contract, potentially entitling the employee to compensation or reinstatement.
#### Practical Steps for Employees
Employees are advised to review their employment contract and any car usage agreements for clauses about revoking private use or withdrawal of the company car. For cases where there is dispute or no clear contract, consulting a labor lawyer is advisable to assess potential claims. If a works council exists, it may help negotiate collective solutions if the benefit is withdrawn for a group of employees.
#### Recent Ruling Sets Precedent
A recent ruling by the Federal Labor Court, case number 6 Sa 519/23, has set a precedent for similar cases where employees lose their claim to company cars with private usage rights. The ruling states that existing rights can be changed and the claim to a company car can expire, even if the works agreement changes with the employer.
The case involved an employee who had a company car with private usage rights since 1996, which was recalled during a company merger in 2021. The new employer's works agreement stated that the employee no longer had a claim to the car. The Cologne Higher Labor Court rejected the plaintiff's application and did not recognize a claim to the initial compensation amount of 600 euros.
This topic is particularly relevant for employees with company car regulations in form contracts. There must be an open reference in the employment contract to the works regulations for this to occur, as stated in the ruling. The Association of German Labor Lawyers (VFAA) drew attention to this ruling. Each month without the company car was valued at 300 euros in the initial ruling. The plaintiff appealed the initial ruling and applied for future compensation payments, but these were also rejected.
In conclusion, employees in Germany do not have a general legal right to compensation if a company car with private usage rights is withdrawn, unless there is a breach of contract or a specific agreement provides for compensation. The key is to examine the employment contract and any related agreements, and seek legal advice in case of dispute. Compensation is otherwise linked to broader employment changes, such as termination or restructuring, rather than the withdrawal of the car benefit alone.
If the private use of a company car is outlined in an employment contract and the employer wants to withdraw it due to legally-justifiable reasons, the withdrawal would not be considered a breach of contract. Employees who have contractual rights to a company car with private usage may not have a general legal entitlement to compensation if it is withdrawn, but they could potentially claim compensation or reinstatement if the employer does so without contractual justification.
