Company car use a benefit?
Ed Canning Jun 15, 2015
QUESTION: I worked as an outside sales representative for a company for five years. When I was terminated I was offered four months’ pay in lieu of notice. The employer calculated my hourly salary and commission but did not include any compensation for the use of the company car. Having that car saved me a lot of money and was one of the perks of the job. Should compensation have been included in the offer?
Four months after five years as a sales representative sounds about right. A judge would try to put you in the same position that you would have been in if you had been given four months’ notice…if the employer had said, “Four months from now your job is done.”
Of course if that had happened, you would have had the car for four months. As a result, in most cases a judge would award you some amount in compensation for the loss of that benefit over the notice period. If the use of the company vehicle was not recorded as a taxable benefit on your T4, however, you may have a problem. The same applies if it was recorded at a very minimal rate.
If you tried to get it you would end up in the unenviable position of effectively saying to a judge who is looking at your T4 for the last five years, “I know that I was happy not to pay taxes for the use of the company vehicle and not to have it recorded on my T4 at all or at a minimal level but now that I’ve lost the job I want compensation.”
This is called trying to have your cake and eat it too. Judges don’t like it. There are some cases where judges have awarded damages for the loss of a company vehicle even though it never appeared on a T4 but I would not count on it. Even though you weren’t the one that created the T4 every year, let’s face it, you were happy enough not to pay the extra taxes. Now the employer is going to be happy not to pay the extra damages over your notice period.