When seeking job opportunities in today’s modern working world, salary sacrifice car schemes are becoming a more widely offered employee benefit. This offering allows an employee to give up a portion of their salary to fund a car, where the employer purchases the car, and the employee can use the car and pay back the business over time.
This arrangement can benefit both parties by providing the employee with a brand-new car while reducing their tax liability, and the employer can save on national insurance contributions. However, businesses must be aware of their legal and moral responsibilities when it comes to employees who drive for work, even if they have a car on a salary sacrifice scheme. In this article, we’ll explore what a salary sacrifice car scheme is and the responsibilities businesses have under health and safety legislation.
What is a salary sacrifice car scheme?
A salary sacrifice car scheme is a contractual agreement between an employer and an employee, where the employee agrees to part with a portion of their salary in exchange for a car. The employer will lease or purchase the car and then provide it to the employee to use for personal and work purposes. The employee will typically make monthly payments from their gross salary, which can lower their taxable income and, in turn, reduce their tax liability.
Responsibilities under health and safety legislation
Businesses have a duty of care to ensure the health and safety of their employees while they are at work, including when they are driving. This responsibility is outlined in the Health and Safety at Work Act 1974 and the Management of Health and Safety at Work Regulations 1999.
These regulations state that employers must assess the risks associated with employees who drive for work and take steps to manage those risks. This includes providing employees with adequate training, ensuring their vehicles are roadworthy, and monitoring their driving behaviour.
When it comes to employees who drive a car on a salary sacrifice scheme, businesses still have the same legal and moral responsibilities. Just because an employee has a car on a salary sacrifice scheme does not acquit the employer of their duty of care. Some argue that it places an even greater responsibility on the employer as they are providing the vehicle.
The Health and Safety Executive (HSE) recommends that employers have a clear policy in place that outlines their responsibilities and expectations regarding employees who drive for work. This policy should include details on vehicle maintenance, driver training, and incident reporting. It should also be regularly reviewed and updated as necessary.
EV salary sacrifice scheme
In addition to the financial and tax advantages, there is an emerging trend in salary sacrifice car schemes where employers are now offering electric cars as part of the arrangement. This means employees have the option to choose an electric vehicle for their salary sacrifice. However, the inclusion of electric vehicles in these schemes brings its own implications for safety behind the wheel.
One important consideration is the need for adequate training and awareness of the specific characteristics of electric vehicles. Employers should ensure that employees who opt for electric vehicles receive proper training to understand and manage the differences effectively.
Additionally, employers should address charging infrastructure concerns, provide access to charging facilities, and help employees plan their journeys to optimise the range of their electric vehicles. Maintenance and servicing requirements should also be considered, with provisions in place for routine checks and repairs. By addressing these considerations, businesses can promote the safe use of electric vehicles and fulfil their duty of care to ensure the safety of their employees on the road.
Know your schemes
While a salary sacrifice car scheme can be a great way for employers to attract and retain staff while providing employees with a brand new car, businesses must be aware of their legal and moral responsibilities when it comes to employees who drive for work, even if they have a car on a salary sacrifice scheme.
By having a clear policy in place and regularly reviewing it, businesses can fulfil their duty of care and ensure the safety of their employees on the road. Get in touch today to learn more about a salary sacrifice car scheme.
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