By judgement dated 21 March 2012 (docket no. 5 AZR 651/10), the
BAG classed as fundamentally permissible a clause contained in an
employment contract entitling the employer to revoke the use of the
company car without compensation in the event of the employee's
garden leave. The BAG did, however, stipulate strict requirements
for the execution of the right of revocation.
In the underlying factual situation, the employee was put on
garden leave after having herself terminated her employment
relationship. In reference to a revocation clause contained in the
employment contract, the employer simultaneously demanded the
return of the company car which the employee had previously also be
permitted to use for private travel. The contractual provision
stipulated that the provision of the company car could be revoked,
inter alia in the event of the employee's paid release from
employment duties during her termination notice period. The
employee was of the opinion that the revocation invalid and filed a
payment claim on grounds of the loss of use of the car until the
expiry of the termination notice period. Ultimately, the
employee's claim was granted by the BAG.
In established jurisprudence, the BAG subjects revocation
clauses to a two-stage examination. During the first stage
– the examination of the content – the BAG
essentially checks whether the grounds for a revocation are stated
in the clause and whether the revoked benefit constitutes no more
than 25% of the regular earnings. The disputed clause withstood
this examination. At the second stage – the examination
of its execution – it subsequently checks whether the
execution of the right of revocation in the specific individual
case can be considered equitable. The BAG's weighting of the
employer's interests in the immediate return of the company car
and the employee's interests in the continued private use
thereof fell in the employee's favour: for her, the company car
was her only car. Furthermore, pursuant to Sec. 6 I no. 4 German
Income Tax Act [Einkommenssteuergesetz, EStG] she was
obliged to tax the private use at the full monthly flat rate,
despite no longer being able to use the car for the remainder of
the month after its return on 9 June 2009. This – along
with the loss of use – led to a perceptible reduction of
her net income and therewith to a prevailing interest in her
continued use of the company car.
The judgement shows that, although revocation clauses concerning
a company car provided to an employee can be valid in principle,
the BAG nevertheless immediately restricts the employer's
striven options for action by setting strict requirements for the
execution of such right of revocation. Following the BAG's
logic, a revocation during an ongoing month is always impermissible
because the employee suffers a loss of use without being exempt
from the (proportionate) tax burden of the private use. However, a
revocation is also only possible to the end of a month if the
employer can present cogent reasons. It does not suffice here just
to generally indicate the preferential business-related use of the
car. Rather, the employer will have to represent a definite need.
In my opinion, this exists if the employer transfers the tasks of
the employee put on garden leave - tasks which require the use of a
company car (for example, field staff) - to another employee who
does not have a company car.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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