In short, no there is no specific minimum salary requirement for an employee to take part in the Scheme. However, an employees wage cannot fall below National Minimum Wage (NMW) due to salary sacrifice.
Therefore, if the cost of leasing an electrical vehicle through salary sacrifice may result in the employee's salary falling below NMW, they are not eligible for the Scheme.
What is the National Minimum Wage?
The National Minimum Wage is the lowest amount per hour that most workers in the country are entitled to be paid by law.
How do we ensure employees do not fall below NMW?
Our quote tool
Our easy to use quote tool asks your employee for their gross annual income, and will check that the monthly payments for the car they have chosen and any related costs (eg. insurance) will not result in them falling below NMW. If they do, the employee will not be able to progress with the quote.
Being open and transparent
Here at ECS we want what is best for the employee. That's why our dedicated Electric Vehicle Specialists are obliged to explain to employees salary sacrifice, affordability and the NMW. This is done in detail so that they have all the information they to make a financially sensible decision before they place their order. In addition, employees also need to sign off that they understand when they place their order.
The company has to sign off on the order
Furthermore, we ask the Employee and Company to sign the Car Order & Salary Sacrifice Agreement to ensure they do not fall below NMW. The Salary Sacrifice Agreement is a contract the employee and company sign agreeing to salary sacrifice a certain amount, giving the company the opportunity to review the impact of the employee's salary sacrifice and decide whether or not they want to allow the employee to lease the car through the company.
What if the National Minimum Wage rates change in future?
In general, minimum wage rates will go up over time (with inflation). The government sets out future rates that would typically start from day 1 of the next tax year.
In these cases, if an employee does not have a change in pay or hours, this may cause them to go below NMW thresholds.In reality, this is quite unlikely, as most companies offer employees annual pay reviews and pay rises in line with inflation.
However, to support our clients, we will carry out a review of NMW changes and their impact on employees on the scheme. If we find employees that may fall below it as a result of the increased NMW rate, we will contact the company to notify them, ask them to check the contracted hours and gross salary of the employee.
What happens if the salary sacrifice results in the employee falling below NMW later down the line?
This usually does not happen because most employers increase their employees salary in line with inflation. However, if the employee is now paying less than NMW, the employer will need to increase the gross salary of the employee to ensure they continue to meet NMW legislation.
If the salary is not increased then the employee will have to pay for the lease through their net salary.