Stuck in job due to car scheme

amandaleeds

My partner can either receive a car allowance or take a company car. Both schemes require a 3 year commitment and he has to have a reasonably high spec and it can't be more than 5 years old.

He'd like to relocate but if he signs the new lease he's stuck there for another 3 years. If he was buying a car he would just buy something cheap, old and practical! When he has bought a car on finance, the work mileage needed is so high that the depreciation is huge and not outweighed by the car allowance.

How do people in this situation ever manage to leave as the contract states he'd have to pay the rest of the contract cost if he left early?

monkey-fingers

https://forums.moneysavingexpert.com/discussion/6654570/stuck-in-job-due-to-car-scheme

When you say relocate, you mean with the same company?

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6654570/stuck-in-job-due-to-car-scheme

Surprised the cash option has a minimum term, company cars often do for obvious reasons.

Presumably if he buys a car himself then he is getting the car allowance plus the 45p/25p per mile on top.

As to what most people do? Time their leaving inline with their company car cycle or find someone in the business that is within the same cycle and wants to take their car as the next company car

Savvy_Sue

https://forums.moneysavingexpert.com/discussion/comment/81877066#Comment_81877066

I presumed OP meant changing company?

People cope with preparation. As above, or pre-saving, or by checking whether having bought the contract out from the company he could then relinquish it to the original provider.

monkey-fingers

https://forums.moneysavingexpert.com/discussion/comment/81877110#Comment_81877110

My last place used to have a similar scheme.

However, the deal was this;
If you stayed with the company, you had to commit either way for 3 years.

If you left the company and you had a car, you handed it back.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81877110#Comment_81877110

What I have seen at some places, and maybe what the OP's scenario is, you have to make a decision to take the car or the car allowance and, once you pick your choice, you have to stick with it for the full three years that the lease would be if you took a car.

As you say, obvious reasons if opting for the car.

The reason for placing the same restriction for taking the allowance is to prevent people flipping their choice randomly and asking to go back to the car whenever it suits the employee. The company simple clarity and do not want the admin of random requests at random times which all cost admin time to respond.

I have seen some employment schemes where the individual is liable for some costs if they take the car. Usually if the employee picks the standard car but adds some "extra". I don't think the employer can force the employee to carry the full costs of the car for the remainder of the three years. Obviously, if the allowance is taken, the employer simply stops paying the allowance once the individual leaves.

Tabieth

There must be a clause if someone leaves?

amandaleeds

Sadly it seems you then have to cover the car allowance (the new company might not) or pay the remaining lease on the company car upfront 😬

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81877837#Comment_81877837

I really can't see how that makes with regard to the car allowance.

The company pays the employee, say, £400 per month car allowance for three years. The employee leaves one year into the three year cycle. The employee does not then have to pay the company the £9.6k of car allowance they have not received.

Likewise, the lease costs for the car for the remaining two years cannot be paid by the departing employee as that would be "restraint of trade".

I will be more than happy if you can clarify how I have totally misinterpreted what you meant.

If I have not misinterpreted what you meant, please can you share the actual clauses (redacted as appropriate) of the car policy referring to this so that the forum can make a more complete comment?

Marcon

https://forums.moneysavingexpert.com/discussion/6654570/stuck-in-job-due-to-car-scheme

If he has a car allowance there is no 'contract cost' because there's no contract with a car supplier, unless you are actually describing slightly different options - ie you either have a company car, or a lease car (which would be a bit odd).

I think as suggested above that the 3 year 'commitment' is to the decision whether to have a company car or a car allowance - maybe post a copy of the relevant clause (all identifying info redacted) here?

amandaleeds

https://forums.moneysavingexpert.com/discussion/comment/81877865#Comment_81877865

so if he gets the allowance it'it's up to him to take out a private lease which is usually 3 years. If he left after a year he would still be tied into the lease and responsible for the 500+ a month payments. It's not a guarantee that a new company would give him a car allowance. As he has to do very high mileage, the allowance never actually covers much of the running costs. It would be cheaper to run an old car but he'he's not allowed to have an old one.

if he goes for the company car, it's more tax efficient apparently (salary sacrifice?) but if he leaves after a year he would have to pay the remaining amount on the lease i.i.e. 2 years of payments.

both options seem crazy to