Salary sacrifice car schemes – consumer rights warning

PHK

Grumpy_chap said:

Okell said:

OK.  I wasn't sure you had answered it previously but - if I understand you correctly now - you are saying it simply forms part of the employee's remuneration package*.

Yes.
That is how I understand it.
I do not believe it is a hire and therefore affording consumer rights to the individual.

I gave an example upthread of how being an employee does not mean you can never have consumer rights on an item acquired from the employer.  The difference I used was a Car Sales Representative having the use of a car as part of their remuneration package (not consumer) versus the same Car Sales Representative buying a car for family use and happening to buy from his employer the Car Dealer (consumer).

Grumpy_chap said:

Let's consider a Car Sales Representative working for a Car Dealer.

If the Car Sales Representative sells that car to a Consumer, then the Consumer has consumer rights for the purchase from the Car Dealer.

It is common that a Car Dealer provides the Car Sales Representative with the use of a car, and this is part of the salary and reward package.  The use of the car is subject to BiK in the same way as for any Employee of any company.  The salary and reward package might also include pension contributions, healthcare or whatever.  However, that use of the car by the Car Sales Representative (even as part of the salary and reward package) does not create a consumer relationship between the Car Sales Representative and the Car Dealer - that relationship remains one of Employee - Employer.

The fact the Car Sales Representative is an Employee of the Car Dealer does not of itself preclude a Consumer relationship from existing at the same time as the Employee - Employer relationship exists.  I just do not consider that the use of the car within the salary and reward package creates this Consumer relationship.  The Consumer relationship would be created if the Car Sales Representative used their post-tax income to purchase a car from the Car Dealer.

I can give another example:
An individual works for a High Street electronic goods retailer and, in the course of their employment, is provided with a laptop which can also be used for personal purposes.  Not a consumer.
The same individual buys a top of the range gaming laptop from the same High Street electronic goods retailer.  Consumer.


I also think, given the high number of online articles about SS car schemes, if consumer rights applied at least some of the articles would comment on that and the mechanism for resolving any issues.

In fact, from a practical perspective, the ability of an individual with the weight of a company behind them probably makes it far easier to get any issues resolved than an individual as a consumer. 
I know when I worked for a company and they had the first Vauxhall Vectra's, there was some issue so gear boxes were failing after around 14k miles.  The first few went through and paid for repairs.  As the number of cases grew, the Fleet Manager got involved and simply wrote to Vauxhall instructing them to resolve the issue or have Vauxhall taken off the fleet list.  The response was practically instant and the resolution positive.
Any individual saying "I'll bever buy another Vauxhall (or Mercedes in the OP's case) will be just met with a shrug.

This all really rather makes me wonder whether there is more to the OP's case than they are letting on.  Has the OP even raised it as a query with the employer?

Sullypants said:

Just wanted to share my experience as I think it exposes a serious gap that could affect anyone using a salary sacrifice car scheme.

I got a brand new Mercedes EQB in June 2025 via my employer’s salary sacrifice scheme (through Arval UK). Within 3 days, I reported major suspension issues. After 5 failed repair attempts and over 15 days in workshops, the fault still isn’t fixed.

When I rejected the car, Arval refused. Their legal team even told me:

• Consumer law doesn’t apply because the contract is technically between them and my employer.

• The Ombudsman has no jurisdiction.

• Scots law doesn’t apply because the contract specifies English law.

All of this is completely wrong. I’m the one paying (through salary deductions) and the car is for my personal/family use only. The Financial Ombudsman Service has now accepted my case.

The bigger issue:

Salary sacrifice schemes are growing fast, but providers seem to be exploiting technicalities to deny employees their consumer rights. Many people would be misled by what I was told and simply give up.

If you’re in a salary sacrifice scheme, please be aware: you do have consumer rights, and the Ombudsman can take your case.

If anyone is going through something similar please share your thoughts or experience. Also anyone needing any help regarding this, I’ll do my best to help. 

It will be interesting to see how the OP updates when the Financial Ombudsman reports back and the outcome.  I remain very surprised that the Financial Ombudsman has taken a consumer case where the individual has not entered into a finance agreement.

I also doubt very much that the FOS have "accepted the case" as the OP says. 

I imagine the OP has completed a complaint form and the case is in the queue to be allocated an investigator. As soon as the Investigator checks the facts (and certainly when they contact the respondent) it will go to a jurisdiction decision and be closed as not something they can investigate. 

A_Geordie

The article was more for your benefit than mine but the CRA provisions that were being discussed haven't changed in since it's inception. Section 48(2) continues to exist and no exclusion in relation to employment contracts for the goods contracts. Take from the article what you will but there is still nothing you've provided that states in no uncertain terms the CRA does not apply to contractual arrangements for the supply of goods by an employer to an employee. Maybe there's something in tax legislation to this effect, I don't know, but until I'm aware of it, I will assume there isn't.

What I can't fathom is that you keep hanging on to the point that there are tax rules around SS agreements and therefore the CRA cannot apply because of these tax rules. If you want to enlighten me around these rules then maybe I can digest to try to understand where you are coming from. But I am rather sceptical that there will be some tax rule that says a SS agreement cannot be an agreement that is subject to the CRA when tax rules are specifically concerned with tax matters as to how the benefit should be taxed and the CRA is concerned with the supply of goods. That would seem to be somewhat of an overreach.

As for your other points around hire/hire purchase, you've kinda lost me. Any contract that includes a provision that refers to the individual having the option to purchase then in law, this will be a hire purchase agreement. If the contract only states that the individual has possession and a right to use in return for payment, this will constitute a lease/hire agreement. This is backed up both under the CCA and case law and will potentially be the difference between more or less restrictive rights for an individual.

Also, there is nothing in law that I know of which prohibits a supplier from offering the car/bike or other goods to the individual at the end of the hire period (so long as there is no option to purchase otherwise it becomes a HP agreement and not a hire agreement), nor does the residual value need to be nominal. Using the bike as an example, most suppliers will calculate and structure the agreement so that at the end of the period it has a nominal value, but they are not obliged to. In fact, when I negotiated a C2W agreement with Halfords a number of years ago, they explained to me at the time that their agreements are structured this way to entice the individual to agree to take the bike because it means that Halfords don't have to dispose or attempt to sell it which would likely cause them to incur costs/time/resources more than the value of the bike itself - convenience rather than mandated by law. 

With that said, my SS agreement suggests that the car is being loaned/hired out to me for a period of time and at the end of that period once the agreement expires, I may be offered a price to purchase if I enquire about it. It has all the hallmarks of hired goods. Chances are the cost of my car will not have nominal value but that doesn't prevent it from being a hire agreement falling within the definition set out in the CRA, I am just likely to pay market value based on its age and condition should I want to purchase it, but there is no assumption that I would, nor would there be with the C2W scheme. 

Obviously we are at opposite ends in terms of our views, and whilst I respect what you're saying, I personally can't accept it without something more concrete in the form of some legal authority that supports what you're saying. I am sure the OP will read both arguments and ultimately up to him/her to decide how to approach the next steps. 

A_Geordie

Grumpy_chap said:

I found this link
https://www.justanswer.co.uk/law/o6nqe-salary-sacrifice-car-employers-scheme.html

It seems to conclude that because the lease agreement is between the employer and the lease company, then CRA does not apply as it is then a B2B transaction.

I think that so-called lawyer (who may or may not be qualified) needs to find another profession, because the responses are appalling. Yes there is a B2B contract between the employer and the supplier but an employer-employee contract is most definitely not a B2B contract.

Andy_L

Even if the employee doesn't have consumer rights against their employer wouldn't they have contractual rights that they are provided with a working company car & so its the employers problem to sort out