EV Salary Sacrifice is one of the best employee benefits out there at the moment. It’s an easy and convenient way to access a vehicle, as the employer takes care of the running costs, insurance company, breakdown cover, and all other costs associated with running a car.
While EV Salary Sacrifice is great, one of the main concerns we have from employers is what happens if the employment contract finishes earlier than expected, as vehicles are leased through fixed-term contracts. Since both the employee and employer can end the employment contract, it’s a double-edged sword, and can be difficult for both sides to understand what the consequences might be.
The good news? Pike + Bambridge offers Early Termination Cover (ETC) from day 1! This means that both employees and employers are covered if a job role doesn’t work out, and there’s one less thing to worry about during what can be a stressful time.
Let’s go through the various scenarios where our Early Termination Cover might be used, and what it means for both employee and employer.
Why might you need Early Termination Cover?
While early termination of an EV Salary Sacrifice car lease can negatively affect both the employer and employee, the consequences look different to each party.
For example, for an employee, it could be the case that you’re no longer able to drive for medical reasons but are able to continue to work. In this case, you wouldn’t want to have to keep sacrificing a part of your salary for a car you can’t use anymore. You’d also need to make sure you change your benefit status with HMRC, as vehicles are a taxable benefit and you might find yourself still paying company car tax in line with the Benefit in Kind (BiK) rate of your vehicle.
Likewise, you could also be in a similar predicament if you were looking to take parental leave and didn’t want to pay for your EV during this time.
If you’re an employer, you might well find yourself in a situation where an employee just isn’t the right fit for your company. While it might be the right choice for the business to let them go, you’d have to consider if there are any potential cost implications in doing this if the employee is signed up for an EV Salary Sacrifice Scheme.
It may also be that you’re put in the difficult position where you have to make redundancies and let people go from the company. Having to worry about EV Salary Sacrifice alongside all the other considerations that come with the redundancy procedure could make a difficult time even more stressful.
It’s these kinds of scenarios where our ETC comes into play, which has been designed to protect both employer and employee from a range of scenarios and issues.
What’s included in our early termination cover?
At Pike + Bambridge, we understand all the complexities that can come with early termination of a job. We’ve included a comprehensive range of eventualities in our ETC for EV Salary Sacrifice.
Our early termination covers:
- Change of employment after the agreement has been in place for at least 6 months from the vehicle delivery date
- The employee resigning from the company
- Extended parental leave
- Unpaid long-term sickness leave, lasting 4 weeks or more, except for any statutorily entitled pay
- Accidental death that was not the result of self-inflicted injury, alcohol, solvent or drug abuse
- Loss of driving licence on medical grounds, for 6 months or more
- Dismissal that was not the result of gross misconduct
- Redundancy
- Retirement
While we aimed to provide a broad range of cover, it’s worth noting that there are some things we’re unfortunately unable to cover, such as:
- The employee wants to change to a different vehicle before the end of the contract lease period
- The employee is relocating where an electric vehicle is problematic
- The employee no longer requires a vehicle
This list is by no means comprehensive, and to confirm if there’s a termination charge, it’s important to check the full details by speaking to our team who will be happy to talk through various scenarios with you.
So if you’ve been concerned about how EV Salary Sacrifice works if a job needs to be terminated early, we hope this overview has reassured you that the majority of scenarios are covered. We’d love to talk more about EV Salary Sacrifice and how we can help you lease your next car for less, so please get in touch to find out more about the wide range of benefits of partnering with Pike + Bambridge.
