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Employee’s private purchase through the company was a consumer purchase

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Legal news
calendar 25 March 2021
globus Sweden

An employee had purchased some products for private use through the company during his employment, which he never repaid. After his employment ended, the company claimed the amounts due, which he denied. According to the Swedish Labour Court, his purchases were “consumer purchases” which meant that the company could no longer claim repayment from the employee.

During his employment, an employee at a plumbing company had ordered two heat pumps for private use through the company from the company’s supplier, which the company had approved. The supplier then invoiced the company at the normal, beneficial price and the company paid for the heat pumps. Six years later, the employee ended his employment but had not yet reimbursed the company for the heat pumps.

The company submitted a claim against the employee, requiring that he repaid the amounts due for the heat pumps. The former employee rejected the claim, stating that it had lapsed under the Swedish Limitations Act, because it had been a consumer purchase. The company disagreed and the question was elevated to the Swedish Labour Court.

Had the company's claim lapsed?

According to the Swedish Limitations Act, the main rule is that a claim is lapsed ten years after it arises, unless the limitation period is interrupted before that, for example by the debtor receiving a written claim or reminder from the creditor. However, a claim against a consumer already lapses after three years, provided that it relates to a good or service that a company has provided in its business activities and the purchase is made mainly for private use.

he Swedish Labour Court found that the former employee was a consumer within the meaning of the Swedish Limitations Act since he had bought the heat pumps for private use, as a regular consumer. The court also found it irrelevant that one of the heat pumps were purchased for the former employee's sister and that the purchases were made during his employment at the company.

According to the Swedish Labour Court, it could further be assumed that the company had chosen to allow employees to make purchases for private purposes at favorable prices, hoping that it would benefit the business. The fact that the claims had run without interest and overall had entailed a loss for the company did not change the conclusion that the employee had made a consumer purchase.

As a result, the statute of limitation for claiming repayment from the company’s side was three years instead of ten. This meant that the claim had lapsed when repayment was claimed six years later. The Swedish Labour Court also found that the limitation period had not been interrupted.

IUNO’s opinion

Companies should be aware of the potential complications that employee purchases might give rise to, especially regarding the statute of limitations if employees do not repay the amounts as the purchases are made. However, other questions, such as consequences with respect to taxation of employment benefits are also relevant to consider.

IUNO recommends that companies that allow employees to make favorable employee purchases establish clear policies governing the terms for the purchases and payment. This is namely because otherwise, failure to administrate purchases could result in a loss for the company or the employee. It could also result in disputes between the parties which could otherwise have been prevented.

[Swedish Labour Court Case 5/2021 of 17 February 2021]

During his employment, an employee at a plumbing company had ordered two heat pumps for private use through the company from the company’s supplier, which the company had approved. The supplier then invoiced the company at the normal, beneficial price and the company paid for the heat pumps. Six years later, the employee ended his employment but had not yet reimbursed the company for the heat pumps.

The company submitted a claim against the employee, requiring that he repaid the amounts due for the heat pumps. The former employee rejected the claim, stating that it had lapsed under the Swedish Limitations Act, because it had been a consumer purchase. The company disagreed and the question was elevated to the Swedish Labour Court.

Had the company's claim lapsed?

According to the Swedish Limitations Act, the main rule is that a claim is lapsed ten years after it arises, unless the limitation period is interrupted before that, for example by the debtor receiving a written claim or reminder from the creditor. However, a claim against a consumer already lapses after three years, provided that it relates to a good or service that a company has provided in its business activities and the purchase is made mainly for private use.

he Swedish Labour Court found that the former employee was a consumer within the meaning of the Swedish Limitations Act since he had bought the heat pumps for private use, as a regular consumer. The court also found it irrelevant that one of the heat pumps were purchased for the former employee's sister and that the purchases were made during his employment at the company.

According to the Swedish Labour Court, it could further be assumed that the company had chosen to allow employees to make purchases for private purposes at favorable prices, hoping that it would benefit the business. The fact that the claims had run without interest and overall had entailed a loss for the company did not change the conclusion that the employee had made a consumer purchase.

As a result, the statute of limitation for claiming repayment from the company’s side was three years instead of ten. This meant that the claim had lapsed when repayment was claimed six years later. The Swedish Labour Court also found that the limitation period had not been interrupted.

IUNO’s opinion

Companies should be aware of the potential complications that employee purchases might give rise to, especially regarding the statute of limitations if employees do not repay the amounts as the purchases are made. However, other questions, such as consequences with respect to taxation of employment benefits are also relevant to consider.

IUNO recommends that companies that allow employees to make favorable employee purchases establish clear policies governing the terms for the purchases and payment. This is namely because otherwise, failure to administrate purchases could result in a loss for the company or the employee. It could also result in disputes between the parties which could otherwise have been prevented.

[Swedish Labour Court Case 5/2021 of 17 February 2021]

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Anders

Etgen Reitz

Partner

Franziska

Brüggemann

Associate

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