Strategy & Operations » Salary sacrifice EV schemes are “a great retention tool”

Employers struggling to retain staff in the age of the “Great Resignation”, while balancing growing employment costs, will benefit from introducing a salary sacrifice electric vehicle (EV) scheme.

“By using a salary sacrifice EV scheme, you’re ticking lots of boxes,” says Simon Hill, managing director at Pink Salary Exchange. “It’s helping build a relationship between the employer and the employee, it’s helping with retention and it’s also helping with the road to net zero.”

In fact, a report by Autonomy found three in four FTSE companies citied staff retention issues as a principal risk to their business in the last reporting period. The report cited companies are falling short of short-term changes such as offering incentives to retain staff.

Salary sacrifice “is a great retention tool,” explains Hill. “Employees want more engagement with their employer, particularly in the big corporates and where they don’t feel they can get close to the decision makers.”

By offering electric cars at subsidised rates, it demonstrates to the employee they are valued, adds Hill.

The timely benefit of offering EVs at a more affordable rate through a salary sacrifice scheme compared to private leasing complements the UK government’s transition to zero emission cars and vans by 2035.

At the same time, employers will be reducing their carbon emissions and contributing to their own net zero efforts.

“If you’re looking at how you deal with the road to net zero, salary sacrifice gives you a way to do that and future proof it through the next 10 or 15 years, while also reducing your overall fleet costs,” says Hill.

Partnering with the right provider

Pink Salary Exchange is the “next generation of salary sacrifice”, describes Hill. The fleet management and maintenance solutions provider, which launched in September 2021, has made salary sacrifice more favourable to both employee and employer.

“We’ve ironed out all of the potential issues that [come with salary sacrifice schemes]. We’ve de-risked it, made it more flexible, and so that it’s a greater benefit to both employee and employer.”

Pink Salary Exchange provides end-to-end service including fleet management, insurance and is fully compliant with regulation. Employers will have access to an account management team to answer queries and resolve issues, making the process easy and hands free.

The web portal compares insurance and leasing rates in the market offering employees the best deals available, says Hill. “It’s a very simple process which doesn’t impact the employer, it’s all about the employee and use of technology.”

Salary sacrifice schemes offer multiple cost-saving benefits for both employees and the employer, Hill explains.

“It will save the organisation money in fleet costs, costs of offering cash allowance and costs of business mileage will reduce […] combined with the saving of keeping employees rather than having to recruit.”

When a salary sacrifice is correctly set up, it will be cost neutral for the employer, says Hill.

“Electric vehicles are going to be the future of salary sacrifice”, says Hill. Offering the scheme on vehicles other than low-emission vehicles “doesn’t’ work” as it comes with higher costs for both the employer and employee making the benefits non-existent.

However, organisations first need to work out if they and their staff can cope with the switch to electric vehicles from an operational perspective, says Hill, as well as outline rules on who is eligible for the scheme.

“Before you go looking at fleet management for electric vehicles and salary sacrifice, you have to start understanding whether your business can make that move to electric and understanding the practicalities of what that means.”

This includes ensuring employees have the capabilities of transitioning from their car to an electric vehicle such as having access to charging facilities.

Read more
Leadership & Management

Employee benefits: SalaryFinance raises £40m

By Shereen Ali | Deputy Editor
Financial Reporting
Governance
Corporate Tax

Top 5 changes you need to know about this April

By Shereen Ali | Deputy Editor