Company car as employment condition

The Netherlands Civil Code sanctions the unilateral amendment by an employer – in reliance by the latter on a clause having been agreed in writing between the parties and on condition that the employer should have a compelling reason for making the change – of a particular employment condition that was originally agreed for a particular employee.

An employer operated a company car scheme for the benefit of all members of staff who in the line of duty had to drive more than 10,000 kilometres annually or whose position within the company warranted it. It was stipulated in the scheme that eligibility could be called into question if the participant no longer met the relevant criterion. The employer had decided to “disenfranchise” a particular employee whose total annual mileage in business trips had missed the 10,000 kilometre maximum two years in a row. The employer, having duly notified the employee in question, granted the latter permission to continue using the car for a few more months. The employer offered to compensate the employee financially. The employee took the position that his having a company car at his disposal represented one of his terms of employment and his employer had no business to change it. Not surprisingly the employer disagreed.

The Sub District Court agreed where the employee argued that his having been provided with a company car formed part of his terms of employment. He had had the use of a company car, which he was also permitted to use in a private capacity, from 2004 onwards, since which date onwards all fuel expenses – including those incurred privately – had consistently been borne by his employer. In the eyes of the Court, the characteristics and duration of the arrangement justified it being regarded as a term of employment.

The clause forming part of the company car scheme qualified as a unilateral amendment clause. The employer, the Court decided, had a sufficiently compelling reason given the cost of the car to remove the employee from the scheme, albeit that the Court ordered the employer to give the employee permission to continue using the car for several more months as well as compensating him financially for a specific term for part of his “automotive demotion”.

Dutch version: Auto van de zaak als arbeidsvoorwaarde