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Why All Employers Should Offer Novated Leases to Staff

November 16, 2017 By Alex Hamilton 7 Comments

Are you looking for ways to recognise your employees’ hard work? If you haven’t tried offering them novated leases, you should consider doing so.

Why All Employers Should Offer Novated Leases to Staff

Employers can offer raises or bonuses to employees as incentives for them to reach sales targets and conversion goals. Such motivators are great for boosting productivity, but they come at a large financial cost to companies.

Luckily, there are a variety of alternative ways to boost productivity at little to no cost to your company, and one of them is novated leases.

Table of Contents

  • What Are Novated Leases?
  • Novated Leasing Process
  • Benefits for Employers
    • Boosting Staff Morale
    • Increased Staff Retention
    • Maintaining a Company Fleet vs. Novated Leasing
    • No Responsibility
    • No Extra Cost to Employers
      • Alex Hamilton
      • Latest posts by Alex Hamilton (see all)

What Are Novated Leases?

In simplest terms, a novated lease is a three-way agreement between you, your employee, and a car dealership. Your employee takes ownership of a vehicle that is then “novated” to you as his or her employer.

As the employer, you then pay the leasing company for the vehicle and deduct the money from the employee’s gross salary (plus the amount to cover FBT, Fringe Benefits Tax).

Employees gain the benefit of paying for the car, gasoline, and maintenance using their pre-tax salaries. You’ve reduced their taxable income, benefiting them financially.

Novated Leasing Process

Setting up a novated lease for an employee involves a few straightforward steps. You might be required to do some payment automation and basic documentation. But other than that, the employee and finance company will do most of the work.

Here’s a breakdown of what you will need to do:

  1. The employee selects a vehicle and receives a quote from the dealer.
  2. A financial consultant will highlight how much the vehicle will cost and the expected financial benefit for the employee by writing up a Salary Package Estimate. Both you and the employee will need to sign this agreement.
  3. The employee will need to complete a financial application. Once approved, the dealer will order the vehicle.
  4. All documents, including the financing and novation documents, will be prepared. You, the financer, and the employee will need to sign them. The employee should also include the necessary supporting documents, such as evidence of comprehensive car insurance.
  5. The finance provider and dealer will then be able to settle the deal. Once finalised, the dealer will advise the employee that his or her vehicle is ready.
  6. Your novated leasing finance provider will ensure that automatic repayments and accurate reporting are in place.

That’s it. The steps are very simple. They require no financial investment on behalf of the employer, only a small investment of time.

It’s important to encourage your employees to evaluate whether novated leasing is suitable for their situations.

Whether or not novated leases are appropriate for employees varies by individual. Nevertheless, offering novated leasing is a beneficial move for any business.

Benefits for Employers

Offering your employees a novated lease might not directly generate income or boost your sales. But novated leases will generate some impressive indirect benefits. Some of these include the following.

Boosting Staff Morale

Employees who receive benefits from their employers will be happier in the workplace. Being happy will increase their productivity by 12%. This is a substantial increase in efficiency with no financial investment.

Increased Staff Retention

With increased staff morale comes better staff retention. Because employees are happier to work for employers who provide benefits, they will stick with your business for a longer period of time.

Over time, your employees’ confidence in and loyalty to your company will continue to grow. This dedication will reduce the employee training costs you would face because of staff turnover.

Maintaining a Company Fleet vs. Novated Leasing

Novated leasing provides greater benefits compared to purchasing and maintaining a company fleet. The large primary investment and ongoing fees of a company fleet are far higher than the cost of providing a novated lease to employees.

Employees will also be responsible for maintaining their vehicles, which will save your business time and money.

No Responsibility

The responsibility of the novated lease is solely that of the employee. If any employees were to leave your business, they would take the novated lease with them.

They would have to continue repayments, pay the residual value, or sell the vehicle. The novated lease will in no way be the responsibility of your company.

No Extra Cost to Employers

The biggest benefit to you as an employer is that you can provide a financial benefit to your employees at no cost to your business. All it takes is a small investment of your time for you to offer your staff a substantial advantage.

With multiple benefits and no financial outlays, novated leasing will benefit your business and the lives of your employees by showing them that they are valued.

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Alex Hamilton

Online Marketing Executive at White Chalk Road
Alex in a content creator and blogger who loves writing about actionable tips and recommendations for small to medium sized businesses. Alex understands that businesses need quick and easy access to quality and relevant information online and hopes to provide this information through publishing detailed articles for business professionals.
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Latest posts by Alex Hamilton (see all)

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Filed Under: Increasing Productivity Tagged With: employee benefits, employee loyalty, employer benefits, increase productivity, novated lease

Comments

  1. Nextaff says

    December 8, 2019 at 11:50 pm

    This article reminds me of how important the relationship between the employer and employees. The thing that keeps the employee work at the very best of their ability is when they think that the employer or the boss understand them, there shouldn’t be a gap between the employer and employee. Thank you for this post, man. So helpful!
    Nextaff would love you to read ..Nextaff CEO interviewed by MyVenturePad.comMy Profile

    Reply
  2. Addy Brown says

    April 10, 2018 at 6:26 am

    Hi..
    Thanks for this information.
    The points you discussed here is good for both the employer and employees.

    Reply
    • Alex Hamilton says

      April 17, 2018 at 8:05 pm

      Thanks Addy!

      It sure is, it can be very beneficial to both parties 🙂

      Have a great day!

      Reply
  3. Nick says

    December 7, 2017 at 1:46 am

    Hey Alex!

    So far a good stuff!
    You have clearly depicted the steps one by one. I think you could be a little bit explanatory in this article. But honestly, you did well. Truly to say, novated leases are a good option for both employers and employees.

    keep it up. And I am going to follow your blog from today.
    Hope you will inform us about newer things like this.

    Thanks
    Sunny
    Nick would love you to read ..Learning New SkillsMy Profile

    Reply
    • Alex Hamilton says

      December 7, 2017 at 7:20 pm

      Thanks for the comment 🙂

      Kind Regards
      Alex Hamilton

      Reply
      • Nick says

        December 7, 2017 at 9:59 pm

        You are most welcome brother. I will be looking forward to your another article.
        If possible please write an article for Corporate Trainers or Corporate Training related guide. I will be following you for sure.

        Thanks

        Regards,
        Sunny/Nick

        Reply
        • Alex Hamilton says

          December 7, 2017 at 10:00 pm

          I’ll definitely continue writing some article on corporate training.

          I have actually submitted one on training to growmap recently, check it out here:

          https://growmap.com/reasons-leadership-training-business/

          Thanks 🙂

          Reply

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