These are hard times for employers as the current buoyant jobs market means workers who feel unfulfilled and undervalued will vote with their feet.
In the US, this has been dubbed the Great Resignation, and last September, for example, 4.4 million American workers quit their roles. We’re certainly not immune to this trend in the UK, and growing numbers of employees will be feeling more disconnection and ennui with their employer because of disruption, homeworking, and furlough.
Data from the Office of National Statistics showed UK job vacancies were at a record high of 1.24 million between October and December 2021 – 462,000 higher than the three months before the pandemic. So, no wonder employees are thinking the grass could be greener elsewhere.
If you’re advising employers, is it time to put forward some fresh thinking? There may be more in the way of signing on bonuses and higher wages, but this is not necessarily a fix, not least when rising inflation – currently around 5.5 per cent – can pretty much wipe out a pay rise.
So, what about offering what is arguably the crème de la crème of perks? Plenty of employees would agree a company car is among the most compelling of benefits and salary sacrifice makes a new leased electric vehicle truly affordable.
Employees select a car and then pay the costs out of their salary, meaning a saving of around 50 per cent compared to leasing a new vehicle via the usual channels. There is no need to worry about depreciation when leasing and what is more, the cars are insured, have breakdown cover and are subject to regular maintenance checks, along with servicing.
You will get a buzz talking to employers about how this works and changing perceptions and attitudes. A company car does not have to be the domain of senior managers or those who drive extensively for work.
Of course, there’s a cost, so, while it won’t be an option for those on the minimum wage – because deductions will push their salary down too low – it’s an easily manageable expense for many in the median range.
Meanwhile, large organisations will be genned up on HMRC and Benefit in Kind (BiK) tax rules. For SMEs though, it can be a different story, and some think of company cars as a tax burden. I’ve had employers who have previously not offered company cars asking if the 50 per cent saving on a new, leased electric vehicle is legitimate – yes, it is.
Big savings can only be passed on if it’s an electric car, and in the current financial year, they attract a BiK rate of just one per cent, with this rising in 2022/23 to two per cent up to 2025.
Apart from the minimal cost of charging, there are no congestion rate charges with electric vehicles, and employers can also install workplace charging points and allow employees to claim back charging costs via expenses for work travel. This can help enhance the salary offering.
Employers who have concerns about what happens if an employee leaves need not worry. The good news is there’s built-in protection and no risk to the employer.
If the employee leaves the company, there are a few options. Either the company can arrange to transfer the agreement to another employee, or find out if the employee’s new employer would be willing to take on the lease. If neither of these options work, the only cost for the employee is one month’s rental, taken from their salary as an administrative charge.
EV salary sacrifice platforms are typically free for employers to sign up to and the vast majority of administration is handled by the platform. The main criteria for acceptance is that a business is solvent and has been trading for at least two years.
A further point is that many more employers – of all sizes – want to show they have green credentials. Electric cars are markedly better for the environment and ensuring that zero- emission vehicles alone are offered as company cars shows commitment and is useful for recruitment purposes.
Although a means of transportation, a car brings freedom and enjoyment. I’ve seen at first-hand, the excitement from an employee when their new electric car is delivered – and it’s all because they work for a company that made it happen.