What happens to the company car at the end of the journey?

When an employee is dismissed, the company car is often a point of discussion. How long may the dismissed employee continue to use the company car? What if he/she damages the vehicle or incurs a traffic fine after dismissal? And does the notice period also apply to the company car?

There are two options for the company car after dismissal.

The idea that an employee may continue to use the company car for a while after dismissal, is a myth. In order to provide an accurate answer, you must first distinguish between dismissal with notice and immediate dismissal with severance pay. The scenarios play out differently with respect to use of the company car.

Dismissal with notice: carry on driving.

If the employer notifies the employee of a notice period that is to be respected via a registered letter, the employment contract shall run on through the notice period. Both employer and employee have precisely the same rights and obligations as before the notice period.

This means that the employer shall continue to pay the same wages. Private usage of the company car equates to the wage. The employee, therefore, is entitled to continue to use the company car for private purposes for the full duration of the notice period.

Immediate dismissal with severance pay: hand back the car immediately.

The situation is completely different if the employer terminates the employment contract with immediate effect. The employee must, however, receive a severance payment! In the event of this type of dismissal, the employer’s obligation to pay wages is immediately cancelled. This means that the employer may immediately demand the return of the company car. The employee then has no choice but to hand the vehicle back to the employer right away.

Just a bit more driving after immediate termination?

Some dismissed employees stubbornly hang onto their company cars. They carry on driving after dismissal, as if nothing has happened. Despite the best efforts of the ex-employer.

This employee must realise, however, that they are skating on very thin legal ice. The unlawful, continued use of the company car is a form of theft! It is, therefore, very likely that the police will come knocking on the ex-employee’s door or that he/she will have to justify their actions before the correctional court. And things will go from bad to much worse if the ex-employee causes an accident during this period. It is complete madness not to immediately hand over the company car in the event of immediate termination, no matter how painful this may be.

There is a third option, as long as the agreement is clear.

Luckily, legal principles do not prevent the ex-employer and the ex-employee to draft an agreement after termination of the employment contract, regarding continued private usage of the company car.

In this case, it is advisable to draw up a clear agreement on paper so that any subsequent discussions can be avoided. This type of agreement must, for example, stipulate who is responsible for maintenance costs, fuel costs, damage and fines and whether the vehicle may be used for long-distance trips.

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