Summer time is travel time. For many employees with company cars, this means long stretches on European motorways, unknown speed limits and mobile speed cameras around the next bend. Whether on the way to visit a customer in Milan, to the trade fair in Amsterdam or simply on vacation in Austria – fleet departments often receive the hearing forms for the owner weeks later. But what follows from this in terms of labor law? Who pays? And what happens when violations accumulate?
Practice shows that many companies do not have clear regulations. This poses risks on both sides. This article highlights the four central problem areas surrounding traffic violations involving company cars and provides guidance for human resources managers.
Who pays the fine – and what needs to be taken into account in terms of tax law?
The driver principle applies in German administrative offense law: the person who is liable for a fine is generally the person who committed the violation, not the vehicle owner. If the employer receives a fine notice, the employer can and must forward it to the responsible employee. There is no legal obligation on the part of the employer to pay the fine.
In practice, however, some companies, such as those in the freight forwarding industry, cover their drivers’ fines for operational reasons. In terms of tax law, caution is required here: The Federal Finance Court made it clear in its ruling of November 14, 2013 (ref. VI R 36/12) that the repayment of an employee’s personal financial debt by the employer generally constitutes taxable wages. According to this decision, the employer’s predominant business interest in the takeover is not sufficient to exclude tax liability.
The situation is different with warning fines for stopping or parking violations, which are assessed directly against the owner in accordance with Section 56 OWiG: Here the BFH decided on August 13, 2020 (Az. VI R 1/17) that the payment by the employer does not lead to wages for the employee – after all, the employer is paying off its own debt. However, if he later waives recourse against the driver, this waiver may in individual cases be treated as a taxable monetary benefit.
In operational practice, this means: Anyone who pays fines as an employer must record the process for income tax purposes and, if necessary, settle them. It is possible under civil law to claim back fines that have already been paid by the employee, provided that no effective waiver has been made beforehand and the claims are not time-barred.
What are the consequences of repeat violations in a company car?
Individual minor speeding violations will rarely result in consequences under labor law. The situation is different when violations accumulate or are particularly serious. Repeated or gross violations of the road traffic regulations with the company car violate additional obligations under the employment contract – namely the obligation to protect the employer’s property and to take the employer’s reputation into account.
In such cases, the employer can react in stages: A warning is the mildest and most important means because it fulfills the warning and documentation function. If the warning is unsuccessful, the private use of the company car may be withdrawn – provided that the company car agreement contains a corresponding cancellation clause. Finally, in the case of particularly serious breaches of duty, termination for behavioral reasons may also be justified. In its ruling of October 8, 2015 (Az. 5 Sa 176/15), the Schleswig-Holstein State Labor Court determined that a risk to road traffic during official work can in itself constitute an important reason for termination without notice.
According to case law, the unauthorized private use of a company car also represents a significant breach of duty (see LAG Rhineland-Palatinate, judgment of January 24, 2019, ref. 5 Sa 291/18). However, a relevant warning is usually required before dismissal for behavioral reasons, unless the violation is so serious that the employee could not expect approval from the outset.
What obligations of cooperation do employers and employees have?
If the driver of a company car that has been flashed cannot be identified immediately, the company as the owner will receive a witness questionnaire from the fines office. The employer is generally obliged to cooperate with the authorities. If he cannot or does not want to name the driver, there are requirements that can place a considerable burden on fleet management. In the case of stopping and parking violations, the owner can also be charged the procedural costs in accordance with Section 25a of the StVG if the driver is not identified before the statute of limitations expires or the investigation would require disproportionate effort.
The employee also has a duty to cooperate: As part of his additional duties under the employment contract, he is required to provide the employer truthful information if he was driving the company car at the time of the violation. If he refuses to provide information, this may constitute a breach of the duty of loyalty under the employment contract and may result in measures under employment law.
In terms of data protection law, the transfer of personal details to the authorities is regularly based on Article 6 (1) (f) GDPR in conjunction with Section 26 BDSG. The employer’s legitimate interest lies in fulfilling his obligations to cooperate and avoiding a logbook requirement. It is important to inform the affected employee about the data transfer.
What follows in terms of employment law if you lose your driving license?
If an employee accumulates points in the driving fitness register in Flensburg through repeated violations, this can lead to a driving ban (§ 25 StVG) or even the revocation of the driving license. If driving a motor vehicle is an essential part of work performance – for example for field staff, courier drivers or service technicians – the employment relationship is in an existential crisis.
A distinction must be made in terms of labor law: a driving ban of one to three months can usually be compensated for by bridging measures. The employer must check whether the employee can be temporarily deployed elsewhere, for example in office work or in an organizational role. This is different with the permanent revocation of your driving license. In this case, termination for personal reasons can be justified because the employee can no longer provide the contractually agreed service. The Federal Labor Court confirmed in 1991 (judgment of February 14, 1991, Ref. 2 AZR 525/90) that the loss of a driver’s license for field service employees can justify dismissal.
The decisive factor is the balancing of interests in each individual case: the employer must consider milder measures, but is not obliged to create a new job or fundamentally change the company organization. The employer also does not have to accept a private replacement solution in which a third party takes over the travel – the service must generally be provided personally according to Section 613 of the German Civil Code (BGB). The Nordhausen Labor Court (judgment of May 7, 2026, Ref. 3 Ca 1094/25) recently confirmed that even a previously perfect length of employment does not force the employer to permanently forego the agreed mileage.
Important: If the loss of your driving license was caused by a traffic violation committed privately, there is no direct breach of your employment contractual obligation. Termination for personal reasons remains possible because it is not based on fault, but rather on the objective impossibility of providing the service.
Conclusion: Legally secure with a clear company car policy
Traffic violations involving a company car are not a trivial offense. A combination of preventative and reactive measures is recommended for employers, such as a company car policy for naming violations, the obligation to provide driver information and the revocation of private use in the event of repeated violations. The tax implications of assuming a fine should also be agreed in advance.
Clear communication on the part of the employer and employee ensures that a speed camera photo does not become an emergency under employment law.
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Author and author:
Benjamin Onnis is a specialist lawyer for labor law and partner at FPS LAW in Berlin. He represents national and international companies in all matters of labor law and advises in particular on the areas of temporary employment, employment contract design, company pension schemes, co-determination and company agreements.
Lena Grebe is a labor law attorney at FPS LAW in Berlin. She advises and represents national and international companies in all matters relating to individual and collective labor law and the interfaces between labor law and immigration law.
