- The low benefit-in-kind of just 1%, which will be capped at no more than 2% until 2025, means zero-emissions cars on a salary sacrifice scheme can be a truly affordable way of driving.
- Most employers have restricted travel into the office and discouraged people from travelling on public transport, but there has been active encouragement to walk or cycle, or work remotely.
- Bikes-for-work schemes are increasingly popular in some European countries such as Germany, where employees can typically save up to 40% on the total value of the bike.
We all know that the Covid-19 (Coronavirus) pandemic has impacted many things for staff right across the world over the past 18 months, including reward and benefit packages. One benefit that may have been swept under the rug is the staff travel scheme, which can vary from country to country.
The impact of the pandemic
The transport needs and safety of countless key workers during the pandemic meant that the use of private vehicles was one of the only options available.
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Paul Gilshan, CEO of Tusker, explains that two key factors helped many to access vehicles via Tusker’s salary sacrifice schemes in larger numbers than before. “Firstly, as public transport was either unavailable or unsuitable for these workers, the ability to access safe, affordable private transport became crucial to many. This resulted in a huge upsurge in take-up of travel benefits via salary sacrifice schemes, particularly those on lower salaries.
“Secondary to the safety and convenience aspect, is the government’s continued support of electric vehicles and ultra-low emission vehicles cars when provided as a work benefit. The low benefit-in-kind of just 1%, which will be capped at no more than 2% until 2025, means zero-emissions cars on a salary sacrifice scheme can be a truly affordable way of driving, ensuring those on lower salaries can access electric vehicles,” he says.
He notes that Tusker made sure there were no penalties for any early terminations of schemes in the event of a change of circumstances once the initial exclusion period had elapsed for employers and employees, due the economic upheaval of the pandemic.
Some of the main concerns around staff travel benefits have been around insurance cover for Coronavirus, the process for certificates and whether the correct documentation is in place.
Penny Pemberton, principal at Aon, states that although travel plans could have been cancelled during the pandemic as it was so limited and claims were very low, corporates renewed instead. “The [employers] were concerned that if they cancelled, they wouldn’t be able to negotiate additional cover, such as Covid cover, when they needed to place a policy again. Clients negotiated on prices and looked for profit shares, but the market didn’t reduce premiums hugely. Most [employers] have restricted travel into the office and discouraged people from travelling on public transport, but there has been active encouragement to walk or cycle, or work remotely,” she says.
Some providers found that their company car salary sacrifice schemes gained more interest from employers. Jim Blair, operations manager at Arnold Clark Vehicle Management, comments that where resources are tight, a car benefit scheme allows an employer to enhance their salary package without affecting the salary bill. “The pandemic has placed a financial burden on many [employers]. It hasn’t been a level playing field, as some [employers] have suffered more than others. As a result, schemes like our Affinity cars scheme or salary sacrifice for electric cars have become increasingly popular,” he says.
Staff travel schemes vary in each country and is often dependent on the industry, the role or seniority level. While some countries provide travel allowances as part of their mandatory benefits, some provide them as part of the salary makeup, like in India.
Pemberton explains that there aren’t really any travel schemes offered across the Europe, Middle East and Africa regions that the UK hasn’t taken up. “Transport cards, [bikes-for-work] schemes and loans or subsidies for travel are popular in other European countries.
In some markets, [employers] must legally pay 50% of the employee journey to work. In other countries there are tax advantages to offer this through salary sacrifice. Countries where transport cards are popular include Ireland, Spain, Germany and Belgium. Bikes-for-work schemes are increasingly popular in some European countries such as Germany, where employees can typically save up to 40% on the total value of the bike,” she says.
Simon Moyle, Vivup’s CEO, explains that it is one of the most popular employee benefits on the provider’s platform, as he currently has 260 clients making this benefit available to their employees and in the past 12 months, has supplied more than 6,000 bike orders.
“It’s not just popular during spring and summer, we’ve noticed the [bikes-for-work] scheme is now a year-round benefit as more people are avoiding overcrowded public transport, looking for ways to stay healthy and save money. From our work with the Cycle to Work Alliance, we know that eight in 10 employers said the scheme is a very important benefit to their employees. Over the course of the pandemic, the scheme has played a critical role in helping key workers to safely commute to work,” he says.
Adrian Warren, chair of the Cycle to Work Alliance, adds that cycling is becoming an even more attractive means of commuting post-pandemic. “The benefits of cycling are far-reaching, not just for employees’ mental and physical health, but also for the environment and UK productivity. As providers, we’re always looking at how we can help employers to encourage more of their workforce to commute by bike, and encourage a culture of active, carbon-free commuting across the UK,” he says.
Company cars in other countries
The company car scheme in other countries is just as prevalent as in the UK. Pemberton states that company cars are also popular in Europe, saying: “It is a common benefit in many countries including France, Germany, Italy, Luxembourg, The Netherlands, Portugal, Hungary and Spain.”
Blair believes that the company car represents one of the most valuable benefits, both for essential drivers and rewards drivers in the UK and across Europe. “While it’s fair to say that company cars exist in other European countries, with Germany, Belgium and Holland springing to mind, they definitely have a special place in the hearts of UK drivers,” he says.