What about the buyout amount of the lease car upon termination of employment?

You may only pass on a buyout fee for a lease car upon termination of employment to the extent that it concerns actual costs. If you pass on the damages charged by the leasing company due to early termination to the departing employee, that amount must be traceable to actual damage. Items such as VAT (which you reclaim as an entrepreneur) or lost profits are not included. Moreover, good employership requires that you first recalculate the amount and, if necessary, negotiate with the leasing company before passing it on to the employee. A clear car policy established in advance makes this distinction between recoverable and non-recoverable.

What is the buyout amount for a lease car?

A lease contract runs for a fixed period, often 36 to 60 months. If the employee terminates their employment early, the leased car must usually be returned prematurely. The leasing company then charges a buyout fee: compensation for breaking the lease agreement early. Essentially, this buyout fee covers the difference between the outstanding installments and the value the car would fetch upon sale or re-deployment.

For the employer, this is a real expense. The temptation is great to pass it on entirely to the departing employee. However, legally, it is not that simple.

Are you allowed to pass on the severance payment to the employee?

Passing on costs is permitted, but within limits. Two conditions are decisive: there must be a basis for recovering the costs, and the amount must reasonable .

A basis in the car policy or employment contract

The clearest legal basis is a written agreement. In practice, this is recorded in a car policy or in the employment contract: the employee accepts that, in the event of early departure, he bears (part of) the buyout costs. Without such an agreement, you are in a weaker position as an employer, but not necessarily empty-handed.

Case law shows that even without an explicit clause, a contribution may be justified on the grounds of good employee conduct. In a 2024 ruling, the subdistrict court held that an experienced employee who resigned shortly after joining the company should have understood that early termination would entail costs for the employer and therefore had to bear part of the severance payment. At the same time, a large portion of the costs was left with the employer. The outcome depends heavily on the circumstances; one cannot rely on it blindly.

The amount must be reasonable and traceable

Even with a legal basis, you may not simply pass on the full invoice amount from the leasing company. Reasonableness and fairness may dictate that a portion of the costs remain the responsibility of the employer. After all, it is the employer who opted for the lease arrangement.

Only actual costs: what case law shows

The core of many disputes is that a severance payment may not exceed the actual damages. The Arnhem-Leeuwarden Court of Appeal already made this clear in 2016. In that case, the employer passed on, among other things, the VAT on the severance payment, whereas a VAT-liable enterprise can reclaim that VAT. The VAT then does not constitute an actual cost and may not be charged to the employee, even if the regulations suggest otherwise. The actual amount of damages in that case was substantially lower than what was initially claimed.

The common thread: the determining factor is the concrete, realized damage, not a theoretical or inflated calculation. Items that you, as an entrepreneur, can offset or recover do not belong in the settlement amount you pass on.

Always double-check a buyout fee before passing it on. Ask the leasing company for a detailed calculation and verify that it aligns with the lease agreement.

Good employership: actively safeguarding the interests of the departing employee

The company is the one that entered into the lease contract. The departing employee has no negotiating position vis-a-vis the leasing company and would otherwise simply have to accept the passed-on costs. Therefore, good employership that you actively safeguard the interests of the (former) employee. In concrete terms, this means:

• request a specification of the buyout amount from the leasing company;
• verify whether the buyout amount has been calculated correctly in accordance with the lease contract;
• investigate whether non-recoverable items (such as VAT) have been included;
• negotiate with the leasing company to limit costs;
• check whether the car can be taken over or assigned to a new employee.

If you take over the lease car for a new employee, there is often no damage at all, and therefore no buyout fee to pass on.

Offsetting against the last salary: pay attention to the limits

A common mistake is simply deducting the severance payment from the final settlement. Offsetting against wages is subject to rules; for example, you may not reduce an employee's wages below the statutory minimum wage as a result, and a valid basis remains required. If you do not take this into account, you run the risk that the deduction will be (partially) reversed. Therefore, always document the offsetting carefully and in writing.

How do you avoid disputes? A strong car policy

Most disputes regarding buyout payments arise because nothing or too little is stipulated in advance. A good car policy prevents time-consuming discussions: you centralize all agreements regarding the allocation, use, and return of the lease car, and you clearly define what happens to the buyout costs upon termination of employment. This way, you protect your company and employees know where they stand.

Important: a car policy that charges more than the actual damage offers no guarantee. The court assesses reasonableness, even if the policy stipulates otherwise. Therefore, have the policy drafted with due legal care.

Step-by-step plan for termination with a company car

1. Check the car policy or employment contract for agreements regarding the severance payment.
2. Ask the leasing company for a detailed buyout calculation.
3. Check the calculations: are there any non-recoverable items included (VAT, lost profits)?
4. Negotiate a reduction or takeover of the contract where possible.
5. Determine the reasonable, actual amount of damages that you pass on.
6. Carefully and in writing document the set-off against the salary.

Frequently asked questions about the buyout amount of a lease car

Does an employee have to pay the buyout amount for the lease car upon termination of employment?

Not automatically. There must be a basis (an agreement in the car policy or employment contract, or good employee conduct) and the amount must be reasonable and attributable to actual damage. Often, the employee bears a part and a part remains with the employer.

May the VAT on the buyout amount be passed on?

No, not if you are subject to VAT as an entrepreneur and can reclaim that VAT. In that case, the VAT does not constitute an actual cost and does not belong in the pass-on settlement amount.

Can the severance payment be deducted from the final salary?

Set-off is permitted, but within limits. There must be a valid basis, and you may not, for example, reduce the employee's wage below the statutory minimum wage. Document the set-off in writing.

What if no agreement has been made regarding the buyout amount?

In that position, you are in a weaker position as an employer, but a contribution can sometimes still be claimed on the grounds of good employee conduct, depending on the circumstances. Only a pre-established car scheme offers certainty.

May the passed-on settlement amount be higher than the actual damage?

No. Case law adheres to the actual, concrete damages. Passing on a higher settlement amount does not hold up, even if a settlement appears to allow it.

Car arrangement or dispute over the buyout amount? We can help

Are you unsure whether you can pass on a severance payment, or are you already in a dispute with a departing employee? We draft a comprehensive car policy that suits your business and advise on disputes within employment law.

• Have a car policy drawn up — avoid disputes about the lease car.
• Employment law advice regarding termination and settlement.
• Schedule a no-obligation intake and explain your situation to us.