The Question
We have a lease car sitting in the car park as the employee left after only six month’s service and will not be replaced. I suggested using it as a pool car till the lease comes to an end but the MD wants to give it to one particular member of staff. I want to avoid it becoming a contractual entitlement i.e. when the lease expires, the company has to provide another vehicle.
Am I OK to get the employee to sign something to say:
- They understand it is not a contractual entitlement
- No replacement car will be provided when the lease expires
- The vehicle may be moved on to someone else before the expiry of the lease ie another lease expires and that person uses this car, then gets a new one when this lease ends
Is that OK and should I add anything else on there?
Legal Advice
Esther Smith, a partner at Thomas Eggar
I don’t think that you will have an issue here so long as you document the temporary nature of this benefit to the employee, and then ensure that any provisions in those documents are followed through in practice.
Getting the employee to confirm that they understand this benefit is being provided to them on a temporary basis only, without any commitment to continue it beyond the expected period, and to confirm that it may be removed during the expected period, should be absolutely fine.
The only other things to think about including would be any rules or regulations governing use of company vehicles, restrictions on mileage or payment for personal use etc. You should also make it clear to the employee that this benefit will be included on their annual P11D and may, therefore, have an impact on their tax code.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
Ian Mather, a partner at Mills & Reeve
You are thinking on the right lines. For something to be a contractual right, the employee must have some reasonable belief that the benefit is something they can insist on being provided.
By getting the employee to sign something that records the understanding set out in your third point, there can be no doubt that this is little more than a lucky windfall, which could be taken away at any time.
In the document, I would set out the background as to why the vehicle is available – just to help avoid any doubt in the mind of the employee.
Ian Mather is a partner in the Employment team at Mills & Reeve. For further information, please visit Mills & Reeve.
