salary sacrifice car

doracookie

Hi

does anyone know what rights I have if any to reject the car as they have had it twice and failed to deal with a serious safety issue?

I have a salary sacrifice car which has developed several faults including a major sunroof failure and the main dealer has also damaged the car whilst having the car in for warranty work.

The first time the lease company (Tusker) advised that I had to give the dealer one opportunity to rectify the damage and fix the warranty work that they did a terrible job on, before they could look to reject the car, the car i had from new in October 2024.

The main dealer (VW) had the car back but im not 100% sure if they even touched the car to be honest the damage was still on the car the service advisor wasnt there to do a handover and the person who gave me my keys back knew nothing about the issues!

One of my main concerns is a serious safety concern as the electronic childlocks wont stay on and my child being a typical 3 year old has pulled the handle whilst driving! I have no manual childlocks.

The person I was dealing with in the leasing compnay has now left and i have someone else who said as I hadnt valeted my car prior to the refused to replace the carpets which still smell as they were so wet from the sunroof leak. never been told this previously and it appears that the leasing company are now on the side of the manufacturer.

I spoke to my employer yesterday and they have basically said it is nothing to do with them but Im sure it is as the contract essential is between them and the leasing company.

I technically cant even return the car due the number of scratches added to the car by the garage and pay the early termination fee due to the damage that the dealer added it is going to be a serious headache trying to argue Ive only added stone chips and no other damage.

The service manager now wants me to take it in AGAIN so he can look at it as he cant even work out from a video the buttons I am pressing showing that the locks arent coming on! and asked me if the button lights should be on or off when the child locks are on!

Thanks

Aylesbury_Duck

Your employer is wrong. It has everything to do with them. I believe they need to reject the car if that's the right way forward.

Isthisforreal99

Your employer is providing you with the car in exchange for you giving up salary so, as above, it is your employers responaibility.

You personally have zero rights under Consumer Rights Act in this scenario.

Okell

As others have said you are not a "consumer" here.

Whatever rights you have are determined by the terms of the salary sacrifice agreement bewteen you and your employer, so it's an employment law issue not a consumer rights one.

A_Geordie

Contrary to other posters, I wholly disagree that the Consumer Rights Act doesn't apply. Yes it's a salary sacrifice agreement but the employer is still supply goods. There's an exemption under the CRA for services which means the CRA doesn't apply in that respect, but the same exemption doesn't apply to goods so it's fair game.

Your employment contract is one of service, but when it is amended to cover the provision of a car under salary sacrifice, it becomes a 'mixed contract', one part service, the other part supply of goods.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81998607#Comment_81998607

There is a long thread considering the extent to which consumer rights apply in the case of SS car.

I fall into the camp if there not being a consumer contract in existence.

https://forums.moneysavingexpert.com/discussion/6628996/salary-sacrifice-car-schemes-consumer-rights-warning

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/81998607#Comment_81998607

Isnt a lease considered the supply of a service rather than goods? Certainly for many factors (eg VAT) it's a services contract.

Would also think that S61(2) which explicitly excludes contracts of employment which this would be part of

CRA does cover a contract for the hire of goods between a trader and a consumer, with a “Consumer” being an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession whereas the vehicle is being given as part of their profession. Whilst we talk about "salary sacrifice" as something special its ultimately a company car and I've never seen anywhere where a company car obtained via salary sacrifice, flexible benefits, exchange of a car allowance or a non-optional part of your employment contract are distinguished from each other. Certainly for most things (eg BIK) they are identical

A_Geordie

@MyRealNameToo

Isnt a lease considered the supply of a service rather than goods? Certainly for many factors (eg VAT) it's a services contract.

You are right, for the classification of VAT, leases would be treated as a supply of service, but VAT rules don't control or displace how the CRA treats the supply of goods. The treatment of VAT remains relevant only in so far as its consideration on payroll. From a contract law perspective, goods are defined as something that is tangible whereas services are intangible. I don't think there is any case law in England that I'm aware of which has determined that physical goods are a contract for services, but I'm open to being corrected.

Would also think that S61(2) which explicitly excludes contracts of employment which this would be part of

S61(2) relates to unfair contract terms so it would prevent someone from arguing that any terms in their employment or apprenticeship contract are unfair. It doesn't affect Part 1 of the CRA where the provisions for the supply of goods have their own scope, in the same way services and digital content.

CRA does cover a contract for the hire of goods between a trader and a consumer, with a “Consumer” being an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession whereas the vehicle is being given as part of their profession.

The key part of the definition, is whether the use is wholly or mainly outside of those categories. I agree that a car could be used for one's profession, but that is typically a small percentage such as travelling to and from work. I've never personally seen or heard of a salary sacrifice scheme that is exclusive for business/profession use only - if that was the intention then employers would typically give you a company car to use. Under my employer salary sacrifice scheme, the car is used 100% for personal use. If it is predominantly used for business or profession use, then I accept the CRA won't apply.

Whilst we talk about "salary sacrifice" as something special its ultimately a company car and I've never seen anywhere where a company car obtained via salary sacrifice, flexible benefits, exchange of a car allowance or a non-optional part of your employment contract are distinguished from each other. Certainly for most things (eg BIK) they are identical

I guess that's because it has never really been challenged. I've long held this view since the CRAs inception, and the usual arguments made by employers or lease providers tend to be along the lines of:

• the employer is not in the business of hiring or supplying cars to consumers.

My response: Contracts to supply goods can sit inside an employment contract. Nothing in the CRA or other employment legislation excludes the supply of goods to be embedded in an employment contract. So long as the employee receives a car that is predominantly used for private use, for a period of time in return for something else, the definition of hire is met in s6(1).

• benefits under salary sacrifice forms part of the remuneration package.

My response: "Consideration" is present regardless of the salary sacrifice. Chapter 2 (Goods) can't apply if the contract is gratuitous. As the employee is giving up part of their future salary in return for possession of the car for private use, that exchange negates any gratuitous arrangement. HMRC also acknowledges this in their Manual (EIM42750) which treats the employees reduction in salary as value in exchange for the non-cash benefit, and under VATSC05881 where HMRC acknowledges the "value of the salary foregone by the employee in exchange for the hire or loan"

• the lease sits with the employer and the leasing provider so there's no privity (contractual nexus) with the employee.

My response: Utter nonsense. The employer has varied the employee's contract to agree to supplying the car in return for a reduction of salary. So there is a contractual nexus between the employer and employee for the supply of the car, and which the employer is responsible.

Just to reiterate, this is my own view and opinion, and I appreciate there will be plenty of others who disagree but I feel there's sufficient justification and reasoning that the CRA does apply in respect of goods supplied to an employee, particularly the point that the CRA excludes consumer rights for services that fall under an employment contract but the same does not apply for goods - that to me is deliberate and intentional when parliament enacted the CRA otherwise the they would have included the same in Chapter 2 for goods.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/81999692#Comment_81999692

And I fully accept you are in a much more learned position to consider it than I.

In your view who are the CRA rights against? The employer or the lease company?

For clarity on the final point, are you only considering contracts that were varied at the point of the car being selected/received etc or also considering an employee contract where company car provisions are baked into the contract irrespective if you elect to have one? Certainly the later was the case in my last perm role as everyone had terms on flexible benefits in their contract and one of the flexible benefits you could receive was a car. It was a complex situation as you could spend more than your pot on benefits in which case pay reduced or you could not buy any benefits in which case you got 20% more pay.

Given the OP states this is a safety issue I personally would probably take it up with my employer on that basis and the fact they are supplying me with unsafe equipment.

A_Geordie

If the employment contract is varied to include the possession of the car under a salary sacrifice scheme, then I would say he employee's rights is against the employer who supplied the goods as for the purposes of the CRA they would be the trader. If the variation of the contract was to establish a direct relationship with the lease provider or to enter into a new contractual arrangement with them, then rights would be enforceable against the lease provider instead of the employer.

However, I know Tusker and they certainly don't contract directly with employees.

I appreciate some benefits may be structured in a rather complex manner but for these purposes, I'm merely talking about those who enter into an agreement for the supply of goods with their employer through a variation of their employment contract. If the benefits were already baked into the employment contract without any consideration i.e. reduction in salary then I would view that as a gratuitous arrangement and CRA doesn't apply. However, if the employee is being taxed, it may be argued that counts as consideration but I've not really thought about that angle before.

I suspect the set up will be that the OP has an arrangement with their employer and not Tusker, so yes they should be taking up those rights with the employer. The problem is that the employer will likely be in a difficult position because they won't be able to hand the car back to Tusker and they will be stuck with it if it is returned. Tusker's obligations generally extend to repair only, however long that takes.