If you have an employee who is thinking about resigning or has resigned from their role, we are here to support you through the process! When an employee resigns midway through their lease, they may be charged an Early Returns Fee. This fee is dependant on the length of their contract and the time elapsed.
If they have Enhanced Resignation Protection included in their contract, then they may not be liable for the Early Returns Fee.
What is an Early Returns Fee?
An Early Returns Fee/Early Termination fee is a cost determined and taken by the lessor for the return of the car. This is typically made up of 50% of the remaining cost of the lease, but is subject to variation from the lessor and does not take into account any additional factors such as: excess mileage, damage above BVRLA’s fair wear and tear, and missing loose items. Any additional fees will be added on separately and is the driver’s responsibility to pay.
How do I know if the employee has Enhanced Protection Service in place?
You can check on the Employee Contract Amendment Agreement that was signed by the driver when placing their order with us and see in the table whether they are signed up with Enhanced Protection Service. Enhanced Protection Service will generally cover the driver in cases where they resign from your role midway through your lease and we here at The Electric Car Scheme will cover the fee. If they don’t have Enhanced Protection Service in place, they may not be covered in any resignation cases, and therefore they are liable for the early termination fee.
How long do they have to have had my car before they are covered by your protection?
You can see in the table in the Employee Contract Amendment Agreement how long they have had to have had the car for before you are covered on Page 12. If they resign within that time, even with Enhanced Protection Service, they may not be covered in the case of resignation. If they resign outside of that time with Enhanced Protection Service in place, they will be covered by this protection and not have to pay the Early Returns Fee.
What is the process for when an employee resigns?
The best way to ensure a smooth and simple process is to let us know about the decision as soon as possible with a rough end date in mind. Letting us know the current mileage, if there is any damage above BVRLA’s fair wear and tear and if the driver is a smoker will help us determine the early termination fee with the lessor. We will also need a copy of the letter of resignation, the company’s official letter of acceptance and in some cases, the P45.
Once we have received the relevant documentation, we can then move onto requesting the Early Returns Quote from the lessor, which has to be signed by the scheme coordinator/a director and sent back, or in some cases is done using the lessor’s portal. Once signed, we can advise how you can book collection.
Following the collection of the car, the company will pay the final Early Returns fee and where ECS is liable, we will cover the cost of this. Reimbursements can take up to 60 days to complete. For a reimbursement, we will need to see the final invoice received from the leasing company (not including additional charges i.e. excess mileage, damages etc.,) proof of payment (direct debit, bank statement, receipt etc.) and the company’s bank details for the money to go back to.
How does salary sacrifice work in cases of Early Termination?
Some leasing companies pro-rate their last month of salary sacrifice fees and others do not so this is dependant on the situation. In any case, we will provide an updated salary sacrifice schedule for the driver’s final month of employment. This will become available on the Employer Portal, when it has been published. If you have a specific date you have to amend payroll for before this is published, do get in touch with us and we can get this to you earlier.
Where should they keep my car when they are planning on returning it?
We don’t recommend driving the car after their last day of work, as they may no longer be insured and so before their last day of work they can either decide to leave the car on company premises (if possible) with the permission of your company to do so, or they can keep the car at their property in the meantime.
As the car is technically the responsibility of the company past the last date of work, we would advise to keep the car on company premises to stay in control of the condition of the car.
Can they take the car with them to their new company?
If they have a new company that they are moving to after their resignation, we can help support with the transfer. If your company and the new company are happy to go ahead with this process, we then will need to set up our cost-neutral scheme at the new company (if they aren’t already set up) and begin the novation (transfer) process. There is a cost associated with novating a vehicle, and we cannot guarantee that the lessor will authorise the transfer of the vehicle. We can help advise of this cost dependant on the lessor.
Your company and the new company will also have to agree to novate the vehicle and sign additional documents to enable the transfer. The new company will also have to be accepted for credit by the same leasing company that the car is with.
While the car can be physically transferred to align with their new start date at the company, during the time of the novation, the original company of the driver may still be charged the monthly lease cost until the lease provider has finalised the transfer, however these costs can be backdated by the lessor to ensure that your company is not out of pocket for these months.
The novation timeline can vary but this generally takes between 2-6 months to complete from end to end.
Can they purchase the car?
If they are keen to keep your car after they have left, they can purchase your EV outright from the lessor. The cost of this will be made up two aspects: the cost of the car + the Early Returns Fee (even if you have Enhanced Protection Service in place.)
Can they transfer my car from a Business to Personal Lease?
Unfortunately, the lessors won’t be able to transfer cars from a Business to Personal Lease.
Summary: When are they liable for the Early Returns Fee?
They will be liable for the Early Returns Fee if they do not have Enhanced Protection Service in place or have resigned with or without Enhanced Protection Service in place within the denoted timeframe laid out in their Employee Contract Amendment Agreement. In cases where they are not liable, we here at the Electric Car Scheme will cover the Early Returns Fee.