Legal dispute over the withdrawal of a company car with private use included

The Hamm Regional Labor Court (judgment of January 23, 2024 - 6 Sa 1030/23) ruled in its judgment on the continuation of the transfer of a company car to an employee for private use.

Facts of the case

The parties were in dispute over the transfer of a company car for private use.

The plaintiff had been employed by the defendant since February 1, 2009. The plaintiff's gross annual salary most recently amounted to approx. 130,000 euros including the non-cash benefit of 1,119 euros gross/month. In 2015, the parties concluded an employment contract according to which the plaintiff was to be deployed as a sales manager within the marketing and sales division. The employment contract itself did not contain any provisions regarding the provision of a company car. According to an addendum to the contract, the defendant provided the plaintiff with a function-dependent company car while he was working as a sales manager. In 2021, the parties then agreed an addendum to the contract, according to which the plaintiff was to be deployed as an area sales manager within the marketing and sales division from July. The transfer to another reasonable job of equal value in terms of knowledge and skills was reserved. Furthermore, the parties agreed, among other things, that the defendant would provide the plaintiff with a function-dependent company vehicle, provided that he was entitled to do so in accordance with the applicable company regulations. Further details can be found in the vehicle regulation function-dependent company vehicle. According to the contract amendment, the benefit was to cease upon termination of the activity. It was also agreed that the defendant was entitled to revoke the benefit at any time with effect for the future if there was an objective reason.

Since February 2023, the plaintiff has been working for the defendant as a sales partner manager for individual customers. The contract was not amended. The company car was still provided to the plaintiff. Following a regular review of the plaintiff's vehicle authorization in March 2023, the defendant determined that the requirement for a permanently high level of mobility (absence from work of more than 50%) could not be established. For this reason, the defendant then requested the plaintiff to return the company car provided to the responsible return offices by December 31, 2023 at the latest.

With his lawsuit, the plaintiff also asserted the transfer of a company car for private use beyond December 31, 2023.

Reasons for the decision

While the Dortmund Labor Court had dismissed the claim, the Hamm Regional Labor Court (LAG Hamm) ruled that the defendant had to provide the plaintiff with a company car for private use beyond December 31, 2023. The plaintiff's claim against the defendant for the provision of a company car for private use had not expired. The provision of a company car for private use is generally owed for as long as the employer has to pay remuneration. It was to be classified as consideration for the work owed and therefore as part of the remuneration owed. The plaintiff only had no claim to further use if an effectively agreed condition subsequent had occurred or an effectively agreed reservation of revocation had been effectively exercised.

The plaintiff's claim was not extinguished due to the occurrence of a condition subsequent pursuant to Section 158 (2) of the German Civil Code (BGB). The relevant clause was non-transparent from several points of view and therefore invalid. According to the LAG Hamm, it was already unclear when a "permanently high mobility" could be denied. The wording of the relevant provisions is ambiguous in this respect, without giving priority to one interpretation variant from the point of view of the public typically involved in transactions of this type, taking into account the purpose of the contract for average employees who are not legally trained. Moreover, it was also unclear which trips with the company car would be taken into account in the question of absence on business. Furthermore, in the view of the LAG Hamm, there is also a lack of clarity as to how the quota of at least 50% of working days should be calculated. Irrespective of the question of the validity of an agreed condition subsequent, the defendant had also failed to comply with the contractually stipulated review period of two years.

The court was also convinced that the revocation clause was invalid. This was because the clause also entitled the defendant to revoke the company car for reasons that were unreasonable for the plaintiff. Even if, in principle, the employer had a recognizable interest in structuring certain benefits flexibly, the economic risk should not be shifted to the employees. The clause allows the defendant to revoke the contract for organizational reasons, including if there is a change in the tasks assigned under the employment contract. However, not every change in the work assignment can constitute a recognizable objective reason for the withdrawal of the use of the company car and the associated private use option.

Practical advice

Contractual agreements between employers and employees regarding the provision of company cars for private use are often the subject of labor court proceedings. This decision by the Hamm Higher Labor Court underlines that the agreement of revocation clauses in particular is subject to very strict conditions of validity. Employers are therefore well advised to exercise particular caution when drafting revocation clauses. From the employer's point of view, it is always advisable to agree a revocation clause in the context of the provision of a company car for private use. However, care must always be taken to ensure that the employer's interest in being able to revoke the provision of a company car for private use, even during the current employment relationship, is expressed in the contract in a way that complies with the provisions of general terms and conditions law. It can be assumed that there will continue to be a tendency in the labor courts that the provisions of Sections 305 et seq. BGB, in particular the transparency requirement (section 307 (1) sentence 2 BGB), will continue to be applied in a particularly strict manner.