Employees receive the business automobile as a perk in addition to their compensation. You can work out an arrangement with your employer to use the automobile privately. This is especially advantageous during parental leave. Parents already have enough to worry about with the kid-friendly furniture of their home and the acclimation of their child, and they don’t want to worry about a private automobile. It is worth noting, however, that a corporate automobile may have a direct effect on the amount of the parental allowance. This article discusses the rules that govern it and what (expectant) parents should keep in mind.
A privately used company car is part of the salary
Employees and bosses can agree on the use of a business car for personal use. The automobile becomes a component of the salary in this situation. The employees are then paid their salaries plus a ‘benefit in kind’ for personal use. If a corporate car can be used during parental leave, there may be no remuneration in the form of wage payments, but employees still earn a salary from the business car from a legal standpoint.
Private use of a company car is advantageous prior to the birth of a child. The state calculates the parental allowance to be provided depending on the employee’s gross wage. Because the corporate automobile is included, the parental benefit entitlement is increased. If, however, a company car may be used exclusively for work purposes, this does not apply. Following the delivery, using a corporate car for personal activities may have a detrimental influence on parental allowance. However, this is only true in particular circumstances and is dependent on the person’s selected mode of reference.
Forms of receipt for parental allowance
There are two types of parental allowance: Basic Parental Allowance and Parental Allowance Plus. Benefits in kind have an effect on the basic parental allowance, which is lowered beginning with the first euro earned. It is worthwhile to weigh the benefits of a privately used corporate car against the deductions for parental allowance in this scenario.
It is worthwhile to recalculate! If the cost of a private car is more than the savings on parental allowance during parental leave, the business car may continue to be utilized. If the cost of the business automobile outweighs the benefits, the employer should agree to a ban on use during parental leave. This is how you determine the amount of parental allowance to which you are entitled.
With the so-called Elterngeld Plus, the situation is different. Here, a corporate car may be utilized privately without impairing parental allowance payments. That is dependent on the gross pay earned before the child’s birth. Parental allowances are not reduced immediately upon earning your first euro. Employees may earn up to 50% of their previous gross wage during parental leave without incurring any reductions. However, if the benefits surpass this amount, deductions for Parental Allowance Plus are also made.
The right to a company car does not exist
Private use of a corporate car is an additional perk that firms provide to their employees. They want to recognize their hard work and take advantage of the potential to retain good personnel. However, there is no legal requirement for employees to have a working automobile. This is especially true while on parental leave. This is where the present employment contract is stored. This means that employees are not required to complete any labor and employers are not required to make any wage payments to the amount formerly required. This means that private usage of a business vehicle is no longer permitted automatically.
It is critical for parents-to-be to discuss using the company vehicles during parental leave with their employer early on. The majority of firms are accommodating and provide private use even during maternity leave. After all, this typically provides them with tax benefits. However, it is critical to ascertain whether and to what extent private usage of a corporate car affects the parental allowance. If necessary, excluding use during parental leave may make sense to avoid deductions. That, too, must be agreed upon in writing.
Regulations on company cars during maternity leave
Maternity leave is subject to special laws regarding the private use of a corporate car. Mothers who are expecting are entitled to 14 weeks of maternity leave in total. This applies six weeks prior to and eight weeks following the birth. Throughout this time period, the contractually agreed upon requirements for a corporate car remain in effect. If an employee was permitted to drive a company automobile privately prior to the birth, they retain that right during maternity leave. This is then deemed a monetary benefit and is added to the employer’s maternity allowance contribution.
It is critical to establish clear guidelines for the usage of the company vehicles during maternity leave and potentially agree on a temporary waiver in advance.
However, in order for these restrictions to take effect, certain prerequisites must be completed. Employees must have driven the business automobile for at least three months prior to the commencement of maternity leave. Additionally, the issue of whether the employment contract contains a revocation clause arises. In this instance, the employer is within his or her rights to seek the return of the corporate car during the maternity leave term. Compensation for employees is not required. Many firms, on the other hand, are rather generous with maternity leave and continue to leave the automobile to the moms. All of this, however, should be explored in detail and documented.
Whether or not a corporate car has an effect on parental allowance and parental leave is very dependent on a variety of conditions. Among other things, the method of payment for parental assistance must be verified. While deductions from the basic parental allowance are made rapidly, employees receiving the parental allowance plus may earn some money without having their parental allowance decreased. It’s worth noting that most parents do not have a legal right to a corporate automobile while on parental leave. Maternity leave, on the other hand, is governed by unique regulations.
It is prudent to consult with the employer early on regarding the usage of a corporate car during maternity leave. While some employees would desire to continue driving the vehicle, others would prefer to agree to a ban on use in order to avoid having their parental allowance deducted. All agreements reached during the interview should be in writing to ensure both employees and employers have legal certainty.