Employee Car Schemes – Creating a Win-Win
Recent research has identified that the majority of HR directors and managers struggle with the best approach to take when it comes to adopting a car salary sacrifice scheme.
What about the risks involved?
Will it really affect employee retention?
Or even benefit the business?
These are just some of the concerns HR managers have.
For HR professionals, providing employees with benefits and incentives is a high priority, and car lease schemes have remained one of the most appealing company benefits for both existing employees and new prospects.
However, recent research has revealed that as many as a third of HR professionals find salary sacrifice car schemes confusing.
At the heart of this confusion are concerns about what happens when an employee leaves the company. In particular, HR managers want to know whether or not an employee is entitled to keep their car and, if not, how this could impact on the business.
While almost a third (29%) of HR professionals revealed that they thought it possible to allow an ex-employee to keep their salary sacrifice car if they left mid-term, almost three quarters (71%) thought that this should be an option for their employees.
While HR professionals may have many questions around how employee car schemes work, the report makes it clear that the majority of those surveyed consider salary sacrifice car schemes to be an excellent incentive for staff, and one that should be shifting to accommodate employees who would like the option of taking the car with them on leaving the company.
What’s the answer to the changing state of employee car schemes?
In response to the blurred lines of what is and what is not feasible with a salary sacrifice car scheme, Maxxia has created an employee car scheme that firstly, clears up any confusion on the part of HR decision makers, and secondly makes it possible for employees to retain the vehicle, even if they decide to leave the company.
Known as a Lifestyle Lease, this innovative scheme from Maxxia provides a more flexible approach to salary sacrifice cars. As a fully portable car lease scheme, it is now possible for employees to take their salary sacrifice car to a new employer if they need to, enhancing employee benefits and eliminating the barrier that once existed when adopting an employee car lease scheme.
Prior to this kind of car scheme, the hassle and costs involved with an employee leaving the company mid-term would be a major drawback for employers, leaving HR managers with a complex exit process to deal with.
The Lifestyle Lease scheme has eradicated that. As the employee car scheme is established with the employee as opposed to the employer, there is no early termination liability or risk for the employer. The employee can then decide on the next steps – whether they would like to continue benefiting from the use of the vehicle with a new employer, continue with the scheme privately, or terminate their contract.
This modification on the traditional company car scheme leaves employees with all the benefits of a salary sacrifice car, and removes the risk for employers.
What should you expect from Lifestyle Lease?
Mutual Cost Savings
Employees who may not have been eligible for their company car scheme may now have the option to benefit from Lifestyle Lease. They will have access to a brand new vehicle at a lower cost than if they were to buy their own privately, with maintenance and fully comprehensive insurance built into their payment instalments.
Maintenance services will include servicing and MOTs as well as accident management, roadside assistance and road fund licence.
With no administration or set up charge, this type of scheme will require little time and resource from the employer. Maxxia will be responsible for providing employees with support throughout the set up process and thereafter.
Reduction in Carbon Footprint
Employees’ income tax and NICs can be reduced with the Lifestyle Lease scheme. Although there will be a benefit-in-kind payment incurred, there is potential for an overall saving – determined by the choice of vehicle.
Due to this structure, employees are incentivised to opt for a model that emits lower emissions, helping them and the employer, to reduce your carbon footprint and more carefully monitor the use of vehicles for work purposes. With a reduced grey fleet, you know that your employees are contributing to your overall corporate responsibility targets.
Increased Employee Retention
Most of the HR professionals surveyed believe that salary sacrifice car schemes are an attractive benefit and with the additional benefits of the flexible Lifestyle Lease, your employees will know that they have further options upon leaving the company if their plans change a couple of years down the road.
Indeed, take up of these kinds of salary sacrifice schemes are increasing and it’s easy to see how this kind of benefit could increase employee retention, and encourage new prospects to join your company.
With Lifestyle Lease HR professionals benefit from a simple process to follow, no risk for the employer, and a very desirable benefit for employees – it’s a win, win situation. Contact Maxxia for further details on implementing Lifestyle Lease for your employees.