How novated leasing can contribute to employee happinessFor your employees
With the latest data from the Australian Bureau of Statistics showing wage growth is at some of its lowest levels in history, HR managers are being forced to look at creative ways to ensure the satisfaction and happiness of their employees. The chances of losing your best-performing employees to your competitors with more attractive salary packages, becomes a real concern.
So, how can you ensure your employees are satisfied without putting further stress on your organisation? One virtually cost-neutral consideration is to add a novated leasing program to your HR arsenal.
Cars are inextricably linked to wellbeing and novated leasing presents a chance for employees to have their cake and eat it too. How? They get a new (or second-hand) car of their choosing while, at the same time, creating the possibility of getting more out of their weekly pay-packets.
Here are three key points to keep in mind when considering novated leasing as a means for increasing satisfaction for your employees:
Cars are a big deal in Australia
Australians rely heavily on cars. We use them to get our kids to school, commute to work, take care of the weekly shopping and errands, and get away on weekends. We can confidently call Australia a car culture. In rural areas, car ownership is considered essential.
As urban sprawl continues and public transport struggles to cope with the increasing demands of commuters, our reliance on cars is increasing. Housing affordability is forcing families to move further away from capital cities in order to meet the costs of living. In rural areas, our reliance on cars increases due to both the lack of public transport and the consolidation of essential services into larger regional hubs. Doctors, hospitals and schools are further away from our doorsteps.
Given the importance of cars to the modern Australian family, allowing staff members to salary package a new vehicle of their choice is an excellent way to positively impact employee happiness. Fitted out with the latest safety technology and state-of-the-art creature comforts, driving a new car will make their daily commute less stressful and their weekend escape more enjoyable.
Your employee’s family gets to benefit too
The benefits of novated leasing don’t stop with the employee. Previously, the ‘company car’ was limited solely to the employee and work purposes. Under a novated lease, the car is available to the employee 100 percent of the time, for work and leisure, as well as other members of their family.
In addition, ongoing costs including fuel, registration, maintenance, roadside assistance and insurance costs are covered as part of their novated lease package, which makes this a very attractive option indeed.
As the employee gets to choose their car, they also get the benefit of selecting the vehicle that’s right for them, their lifestyle and their family. They can choose from a city-friendly small car, to a family sedan or SUV, to a 4WD or high-performance vehicle. Not surprisingly, this kind of flexibility positively impacts employee happiness.
It’s a way to supplement salary packages
Novated leasing is a great way to get some extra cash into the pockets of your employees.
For most novated lease set-ups, the cost of maintaining a vehicle – lease payments, registration, comprehensive insurance, fuel and servicing – comes from the employee’s pre-tax earnings. This means, in most cases, employees will have a larger take-home pay and have no financial surprises when it comes to vehicle running costs when compare to paying with after-tax salary.
When managed properly, novated leasing packages can also take care of any FBT requirements without the need for any additional payments. Of course, everyone’s situation is different so employees should always talk with their tax advisor or accountant for advice on how a novated lease would work specifically for them.
In a nutshell
You might not be able to give your people a pay increase as frequently as you would like, but a novated lease is one realistic way of giving them a financial – and lifestyle – benefit.
As one HR professional told us after experiencing firsthand the impacts of novated leasing program on their employees’ happiness: “You won’t move the needle of employee benefits in such a profound way as you will with the new car option.”
Want to get the ball rolling on a novated leasing program for your business? Start a conversation with LeasePlan.