iscover
Employers looking to boost their benefits offerings may be interested in novated leasing. This can be a worthwhile path towards promoting the attraction and retention of employees.
But what is novated leasing? According to leaselab co-founder Alex Davis: “A novated lease is an agreement set up between you, your employer and a finance provider. Instead of paying for your car outright, you can enter into a lease agreement for the car with the finance provider (for a fixed period – one to five years). At the end of the lease, you can sell the car, pay residual and keep it, or refinance.”
This can be a great way for employers to keep employees happy and engaged. In fact, some of the key benefits are:
- Boost employee satisfaction.
- Add value to an employee’s salary package.
- Reduce or eliminate the need for company cost.
Mr Davis commented: “Employees now want more than just a good-looking salary, so offering perks like salary sacrificing a car can really help entice talented staff.”
“With a good novated lease provider, novated leasing is a cost-neutral process for employers – that is, it’ll cost nothing out of pocket. A good provider will also work on a solution resulting in no fringe benefits tax liability for your business. Given the savings, in a way, it’s like being able to give your staff members a significant pay rise without spending a cent,” he said.
“Payments to the novated lease provider on your employee’s behalf can be set on the same day as the pay cycle. Keep in mind that if your employee leaves the company, they take the novated lease with them. There is no liability to you as an employer. Employees can always transfer their lease to their new employer or unpack it altogether.”
Financial-based benefits such as novated leasing can be an attractive offering, especially in the current economic climate where inflation and a rising cost of living place added pressure on families.
“We have seen firsthand that employees want benefits that can help strengthen their financial health and grow their wealth, especially amid the cost-of-living crisis,” said Mr Davis.
“Employers need to empower their teams with the knowledge that their financial health is just as important as their physical and mental health, so anything you can do to support that in the workforce will only improve your company culture and employee satisfaction.”
RELATED TERMS
Benefits include any additional incentives that encourage working a little bit more to obtain outcomes, foster a feeling of teamwork, or increase satisfaction at work. Small incentives may have a big impact on motivation. The advantages build on financial rewards to promote your business as a desirable employer.
Jack Campbell
Jack is the editor at HR Leader.
