No reimbursement for lease car use during illness

The Hague Court of Appeal recently held that an employer could recover a leased company car from a sick employee without being obliged to reimburse the loss arising from the private use of the car.

The employee in question had been employed for almost 25 years and had a leased company car that he could also use for private purposes. The employer had a personnel guide that set out the terms of employment applicable within its business, including a Mobility Scheme. In terms of this scheme, employees retained the right to the leased car or a mobility contribution during the first six months of illness. After six months of illness, the company car had to be handed back or else the Mobility Scheme was discontinued.

The employee was also allowed to use his company car for private purposes. He signed a user agreement confirming that he had taken note of the Mobility Scheme in the personnel guide. At some point, the employee was off work due to illness. After four months, the employer announced that it would be recovering the leased company car if the employee was still sick after six months. The employer did in fact take back the car after the employee had been off work sick for more than seven months.

In interim relief proceedings, the employee claimed EUR 943 net per month for loss of the private use of the car, plus statutory increment and statutory interest. The employee appealed against the Sub-District Court’s dismissal of his claim.  On top of his previous claim, he also claimed a further EUR 371 net per month for the loss of his fuel allowance. The employee argued that the statutory obligation to continue paying salary for 104 weeks during illness was not confined purely to monthly salary but also to other forms of remuneration such as the private use of the car or compensation for that use. He added that private use of a company leased car was also classed as salary in terms of the Dutch Income Taxes Act 2001. For this reason, the arrangement in the Mobility Scheme to the effect that the right to use a leased company car came to an end after six months of illness was a violation of the obligation to continue paying salary during illness.

The Court of Appeal disagreed. The obligation to continue paying salary during illness does not provide the basis for a claim to continued payment of other forms of remuneration over and above those listed in the Dutch Civil Code. There were no indications in the legislative history that the private use of a leased company car was covered by the obligation to continue paying salary during illness. Nor was this altered by the (taxation law) interpretation of the term “salary” in the Income Taxes Act 2001. The Court of Appeal held that the obligation to continue paying salary during illness did not prevent the arrangement between the parties in the Mobility Scheme to the effect that the company car had to be surrendered and that the Mobility Scheme would be discontinued after six months of illness, with the result that private use of the company car would also come to an end.

The full court decision (in Dutch) can be found here.

Eric van Dam (evd@clintlegal.com / +31 20 820 0330)