The return of company cars is an important aspect of the employment relationship between employer and employee. This process is not only of administrative and legal importance, but also crucial for the relationship of trust between both parties. The correct and careful return of the company car is of great relevance in order to avoid potential problems. In this article, we show which aspects need to be considered in order to ensure a smooth and fair process.
Why is the company car return important?
A company car is a valuable work tool for employees and a salary component if the company car may also be used for private purposes. Nevertheless, the employer can demand the return of the company car in certain cases and should in any case handle the return at the end of company car use with appropriate care. As an employer, there are certain aspects that must be taken into account when returning a company car in order to avoid problems and ensure a smooth handover: from communication with employees to checking the vehicle and handling financial matters. A transparent procedure and appropriate documentation should be followed for this.
In which cases can a company car be returned?
Various reasons can lead to a company car being reclaimed. This may also involve the premature return of the company car:
- Return of company car on termination: When an employee leaves the company, the company car is usually returned.
- Company car return when changing jobs within the company: If employees move to a new position that does not include a company car, a company car return may occur.
- Return of company car in the event of parental leave, illness, part-time work or other changes to the employment relationship.
- Company car return at the end of the contract or lease: Company cars provided under leasing contracts are returned at the end of the contract or leasing period.
- Return in the event of a change of company car in the company: for example, due to fleet optimization or conversion to more environmentally friendly vehicles, a change of company car may occur
For some of these reasons, however, there must be a specific agreement.
Return of company car during parental leave
The employment contract is suspended during parental leave. The employee does not owe the employer any work performance and, in turn, no salary and: no company car. The employee may reclaim the company car during parental leave, but is not entitled to any compensation. There is, of course, the possibility that the employer will nevertheless allow continued use.
Return of company car during illness
If an employee falls ill for a longer period of time, resulting in an inability to work, the Continued Remuneration Act regulates the periods for which the employee can continue to claim the employer’s consideration from the employment contract. Permission to use a company car for private purposes is part of the “remuneration” to be continued within the meaning of the Continued Remuneration Act.
Which agreements for the return of company cars are (in)permissible?
A unilateral right of revocation or voluntary reservations are not permitted, as the company car is part of the employee’s remuneration. Nevertheless, it is possible for the contracting parties to agree a reservation of revocation, provided that the reasons for the revocation, such as economic aspects, performance or conduct of the employee, are stated and this does not interfere with the “core area” of the remuneration structure (the company car component may not account for more than 25-30% of the salary)
Clauses in the employment contract that protect the legitimate interests of the employer when providing a company car are permissible. This includes when the employee is legally released from work or the employment contract is terminated. An initial contractual provision stating that the company car must be returned without compensation if the employee ceases to perform his or her official duties, for example in the event of incapacity for work, is also permissible.
Under certain circumstances, there may be a right to return the vehicle if the employer needs the company car for a replacement employee. In this case, however, the employee is entitled to compensation. A clause on the continued payment of the leasing installments for the remaining term of the leasing contract by the employee after termination of the employment relationship is invalid.
Sample company car policy
The use of company cars should be clearly regulated within a company. Otherwise, there is a risk of misunderstandings and conflicts. To avoid this, it is advisable to draw up a company car policy.
The return of a company car should be contractually regulated
The transfer of a company car is normally based on a corresponding provision in the employment contract or a separate company car transfer agreement. The return should also be clarified here for the following reasons:
- Clarity and transparency: Contractual regulations create clear guidelines for both employers and employees. This prevents misunderstandings and ensures that returns are handled uniformly.
- Liability issues: Guidelines define who is responsible for certain damage or wear and tear to the company car. This protects the employer from unexpected costs and ensures that employees use the vehicle responsibly.
- Vehicle condition: Regulations can specify the condition in which the company car must be returned. This ensures that the vehicle is in an acceptable condition and cleaned, which can increase the resale value of the vehicle.
- Mileage and use: maximizing the mileage or other rules on the use of the company car serve to limit excessive mileage and wear and tear on the vehicle. This can avoid additional costs if the use of the company car exceeds the agreed limit.
- Legal protection: Contractual regulations offer legal protection for both the employer and the employee. In the event of disagreements or disputes, the contractual agreements can serve as a basis for finding a fair solution.
What should be considered when returning a company car?
When returning a company car, you should follow a set procedure and use a return protocol to record all relevant information and avoid problems later on. The following aspects in particular should be taken into account:
Communication: Make sure that you communicate with the employee at an early stage and give clear instructions on how to return the company car. Let them know the exact time and place of return.
Checking the vehicle: On return, the vehicle should be thoroughly checked to identify any damage. Compare the current condition with the original condition when the company car was handed over to the employee.
Logging damage: Document all damage, be it in the form of scratches, dents or other damage. It is advisable to take photos or videos to document the condition of the vehicle. Sign a handover protocol together with the employee in which the condition of the vehicle is recorded.
Mileage: It is advisable to agree an appropriate mileage in advance to avoid excessive use. When returning the vehicle, not only the condition, but also the mileage should be checked to clarify whether additional mileage has been caused by private or business use. Make a note of the vehicle’s mileage when you return it so that additional costs for excessive use or mileage can be charged if necessary.
Return of vehicle documents and accessories: Make sure that the employee returns all relevant vehicle documents such as the vehicle registration certificate, the registration certificate part I and part II (formerly known as the vehicle registration document), the service certificate and the operating instructions. Also check that all accessories such as vehicle keys, navigation devices or chargers have been returned in full.
Final settlement: Check all financial aspects related to the company car. Ensure that any outstanding payments or settlements made by the employee in relation to the vehicle have been settled, such as fuel costs or repair costs for damage caused by employees.
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Conclusion Return of a company car
The correct return of a company car is an important process that should be carried out carefully by both employers and employees. Through clear communication, a thorough inspection of the vehicle and adherence to contractual regulations, potential difficulties and costs can be avoided. A detailed handover protocol that documents the condition of the vehicle, any damage and the mileage is of great importance. This ensures transparency and provides legal protection for both parties. Paying attention to these aspects facilitates a smooth and fair company car handover.
The most important facts about returning a company car
The mileage of the company car at the time of return is important in order to determine whether the agreed mileage has been exceeded or not.
A detailed handover report is crucial to record the condition of the vehicle and document any damage or wear and tear.
Clear contractual regulations create transparency and protect both parties from unexpected costs or disputes.
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