No can do

Using a company credit card for private purposes without express permission from the employer may be grounds for a formal warning or even allow for a conduct-related dismissal (judgment by the Nuremberg Higher Regional Labour Court, Landesarbeitsgericht, LAG; dated February 3, 2015, docket number 7 Sa 394/14).

In the case at hand, the employer provided the employee with a company credit card in 2011. Any charges were deducted from the employer’s account. In 2013, the employee, who frequently used the company credit card to cover expenses for business travel, also used the credit card for private purposes without informing the employer of the private nature of the expenses. The employer’s payroll department used to offset any outstanding amounts and, if applicable, required the employee to reimburse any exceeding amounts. In July 2013, the employer demanded a total payment of EUR 3,673.25, which the employee failed to pay. The employer then dismissed the employee, arguing that private use of the credit card was not allowed and that the employee had been advised of this and possible consequences in June 2013. The employee, however, argued that private use of the credit card had not been prohibited, which was also evident from the fact that the payroll department had offset any potential reimbursement claims.

The court found that the employee had severely failed to apply due consideration to the employer’s financial interests when using the company credit card for private purposes, in particular as he did not openly disclose the private expenses himself.  While the employee was unable to demonstrate which of the outstanding expenses might be business-related, a number of expenses were in fact privately incurred. With this in mind, the court found that private use of a company credit card was not allowed unless agreed otherwise. Such agreement could not be implied from the payroll department’s practice of offsetting any outstanding claims, as this only served to facilitate the employer’s reimbursement claim. The court highlighted that private use of a company credit card on its own would not allow for a dismissal absent a prior formal warning. However, as the employee had not openly disclosed the amounts incurred for private purposes and had not reimbursed the employer right away, this was considered as sufficient grounds for termination of the employment relationship.