17 Mar 2021 Withdrawal of function-related leasing arrangement due to less business kilometres
In a recent judgment, the Court of Appeal ruled on the revocation of a lease arrangement by the employer because the employee was driving fewer business kilometres. The employee opposed this because he was also allowed to use the lease car privately and that advantage would be lost if the lease arrangement was withdrawn. Curious about the outcome?
The employee joined the employer on 1 August 1999 and has held her current position since 1 January 2004. From 1 September 2004, a lease car was made available to her. The lease scheme which applied at the time stipulated that the employer could grant a lease car to an employee if that employee consistently drove 15,000 or more business kilometres per year, excluding commuting. The employee has had four different lease cars since 2004.
In a letter dated 22 September 2016, the employer informed the employee that she would no longer be eligible for a lease car after the expiry of the last lease contract. According to the employer, the circumstances had changed to such an extent (among other things, the employer had moved to a different location) that it was not to be expected that the employee would drive more than 15,000 business kilometres per year, as stipulated in the applicable lease scheme. However, the employee was offered a (financial) transitional arrangement.
However, the employee took the position that the use of a lease car had become a permanent condition of employment for her. According to the employee, from the beginning (2004) she never met the '15,000 kilometres' condition. The employer knew this and never made a remark about it.
The key question in these proceedings was whether the employer was entitled to withdraw the award of a lease car to the employee. The court in the first instance answered this question in the affirmative. However, the employee appealed against the decision in the first instance.
Judgment on appeal
The condition regarding the minimum number of kilometres relates to an entitlement to a lease car granted under a clear condition. It is also established that the employee had not met this condition since 2015 at the latest.
The next question is whether the employee was entitled to rely on the fact that the use of a lease car, regardless of the number of kilometres driven, was now part of her employment conditions.
Applying the test framework according to established case law to this case, the Court of Appeal concluded that the employee was not entitled to rely on the fact that she was entitled to a lease car until the end of her employment. For this opinion, the Court considers it important that the employee knew or at least should have understood at some point (whether or not from the outset) that the use of the lease car was contrary to the lease regulation which was applicable at the time (and is still applicable) of at least 15,000 business kilometres per year. Therefore, she should have taken into account that, despite the fact that the employer used to apply this condition 'flexibly', this could turn out differently in the future, for example because less 'business' use would be made of the car.
The Court of Appeal also considers it important that this concerns the use of a lease car which is related to the position held by the employee. Even if it is true that providing a lease car comes with a certain private benefit for the employee, it is not the case that the lease car was provided to the employee solely because of that private benefit.
Against the background of the purpose of providing a lease car, the employer has a wider policy freedom. This does not alter the fact that there may be reasons for the employer to offer some compensation for the loss of the private benefit, but in this case the employer did just that. The disadvantage which the employee experiences due to the loss of the lease car was indeed compensated by the employer in the sense that she was allowed to continue to use her lease car during the term of her lease contract (until the end of November 2020), after which she receives a monthly (declining) compensation until June 2023, equal to the current lease amount. After this period, the employee was also entitled to a mileage allowance for business kilometres driven.
The court of appeal therefore again found in favour of the employer.
Whether or not a leasing arrangement can be regarded as an employment condition depends on the circumstances of the case. Do you also have a question about a lease arrangement, or about other (primary or secondary) terms of employment? The employment law lawyers at SPEE lawyers & mediation will be happy to assist you.