Change of terms of employment

gerrymaguire

Howdy all,

I was just looking for a bit of advice regarding a change in car policy and its impact on my terms and conditions of employment.

In my contract of employment it states that the company will supply me with a fully expensed vehicle to carry out my day to day duties as a sales rep.

Last week I received an email from them stating that they will no longer supply me with a company car and that I will be required to finance a car myself from the 1st of July. All expenses shall be borne by myself but I will be able to claim the statutory mileage allowance for the car I choose. They are willing to make an annual payment to help me finance the car but the payment shall be subject to income tax.


My questions are

1. Is this a breach of contract?
2. Do I have to accept it?
3. If I have to accept it, what would be the best way to go about financing a vehicle?

Many thanks,

blindsider

Not an expert here, but I've had company cars, and had to finance my own.

- They are changing your Terms, so technically not a breach - they have the upper hand*

- You probably will have to accept it - are there many others on the sales team - what do they think?

- Did your boss talk this through with you? S/he should have - poor form otherwise.

- Lots of very good deals out there for cars now - are you doing big mileage? What BIK are you paying? How much will they pay you monthly?

Best way of financing? Credit union?


My Advice; talk to HR - get them to help you with the figures - BIK v Income Tax

Also read this: http://www.revenue.ie/en/tax/it/leaflets/it51.html

You could probably do worse than ring Revenue and ask for advice - they're helpful. Have your PPS etc to hand.

You will need to consider insurance also - your current company insurance broker should issue you with a letter stating your driving history - you'll need this for any No Claims discount etc. Insurance will vary by car, and your premium will reflect your occupation and mileage. Consider the option of a replacement car via insurance if yours is off the road.


Could you buy your current car from the company or leasing company?

You will have far more freedom when choosing a car, and it will pay to shop around. Skoda, Hyundai, Kia and SEAT all have very good deals at the moment - several offer 'all in' servicing deals.

You could go 2nd hand e.g. http://www.carzone.ie/search/Mazda/Mazda6/Premium-/31113535072193130/advert?channel=CARS

€23K - and, being in sales, you'd negotiate the price......

Tax Band will be important as will servicing and tyres.

If you go for a premium brand e.g. BMW, your servicing costs will be high - find a good independent garage, whichever car you buy.

Honestjohn.co.uk has some good car reviews including running costs


Finally, IMO a clever buy would be sth like this - it's essentially an Audi A4 (old model) - new they're €26K

http://www.carzone.ie/search/SEAT/Exeo/2.0-TDI-/34113612911996070/advert?channel=CARS

2013 car with 10k km = €21K

Tax Band B
58mpg


Best of luck

gerrymaguire

blindsider wrote: »

Not an expert here, but I've had company cars, and had to finance my own.

- They are changing your Terms, so technically not a breach - they have the upper hand*

- You probably will have to accept it - are there many others on the sales team - what do they think?

- Did your boss talk this through with you? S/he should have - poor form otherwise.

- Lots of very good deals out there for cars now - are you doing big mileage? What BIK are you paying? How much will they pay you monthly?

Best way of financing? Credit union?


My Advice; talk to HR - get them to help you with the figures - BIK v Income Tax

Also read this: http://www.revenue.ie/en/tax/it/leaflets/it51.html

You could probably do worse than ring Revenue and ask for advice - they're helpful. Have your PPS etc to hand.

You will need to consider insurance also - your current company insurance broker should issue you with a letter stating your driving history - you'll need this for any No Claims discount etc. Insurance will vary by car, and your premium will reflect your occupation and mileage. Consider the option of a replacement car via insurance if yours is off the road.


Could you buy your current car from the company or leasing company?

You will have far more freedom when choosing a car, and it will pay to shop around. Skoda, Hyundai, Kia and SEAT all have very good deals at the moment - several offer 'all in' servicing deals.

You could go 2nd hand e.g. http://www.carzone.ie/search/Mazda/Mazda6/Premium-/31113535072193130/advert?channel=CARS

€23K - and, being in sales, you'd negotiate the price......

Tax Band will be important as will servicing and tyres.

If you go for a premium brand e.g. BMW, your servicing costs will be high - find a good independent garage, whichever car you buy.

Honestjohn.co.uk has some good car reviews including running costs


Finally, IMO a clever buy would be sth like this - it's essentially an Audi A4 (old model) - new they're €26K

http://www.carzone.ie/search/SEAT/Exeo/2.0-TDI-/34113612911996070/advert?channel=CARS

2013 car with 10k km = €21K

Tax Band B
58mpg


Best of luck

Thank you very much for your reply.

There are five guys on the team and four out of five are very unhappy about the situation.

We were all informed via email at different times and have been told there will be no discussion and that this will be company policy going forward.

One problem we all face is the financial outlay on a vehicle with no guarantee of job security.

We have been given the opportunity to purchase the current vehicles but only at the companies valuations. To give an example a 2010 VW Touran with 147,000kms has been offered to me for €15,000. I have brought this vehicle to two dealers and both have valued it less than €9,000.

Tigger

Don't buy off your boss
I've seen I end in tears, there is a fleet guy on here roc or something wait till he comes on or find him and get his advice

Mrs OBumble

Can you lease cars in this country? I know some sales types did this at home, particularly if they were self employed.

Borzoi

gerrymaguire wrote: »

My questions are

1. Is this a breach of contract?
2. Do I have to accept it?
3. If I have to accept it, what would be the best way to go about financing a vehicle?

Many thanks,

1. Yes it is a change of your terms of employment
2. No. But its the sort of thing that could get nasty. Consult a union rep. Or a solicitor
3. No idea ;-)

Tigger

here he is

http://www.boards.ie/vbulletin/member.php?u=74663

fleet manager will knows the in's and outs i would pm him for the score

blindsider

gerrymaguire wrote: »

Thank you very much for your reply.

There are five guys on the team and four out of five are very unhappy about the situation.

We were all informed via email at different times and have been told there will be no discussion and that this will be company policy going forward.

One problem we all face is the financial outlay on a vehicle with no guarantee of job security.

We have been given the opportunity to purchase the current vehicles but only at the companies valuations. To give an example a 2010 VW Touran with 147,000kms has been offered to me for €15,000. I have brought this vehicle to two dealers and both have valued it less than €9,000.

http://www.carzone.ie/search/Volkswagen/Touran/BLUEMOTI/36313807194960710/advert?channel=CARS

€13500. Dealers won't want the car and will offer low prices, but even still.....The company certainly aren't doing you any favours! I'd probably steer clear.

How long have you been with the company? Are you worried about your future there? I know sales can be tricky in this regard.

Re financing - it's a tricky one. Maybe ask HR to give you 6 months payments up front to use as a deposit - then borrow/finance the rest?

Also, if you're worried re the job - consider buying an older car <€10K for the 1st yr or so and see how it goes...

Nuclear option - dust off the CV.....

Stheno

Mrs OBumble wrote: »

Can you lease cars in this country? I know some sales types did this at home, particularly if they were self employed.

You can using various options.

@ OP one company I worked with did this, change of policy, was accepted by all staff.

Basically we all got an allowance for a car yearly and then claimed mileage.

It actually worked out more profitable for us in the end as we didn't have BIK which you are currently paying if you are not doing more than 15k miles a year in business mileage.

How much business mileage do you do a year?

Mr. Loverman

It sounds like the company has financial problems to be pulling something like this.

Is it a small company?

Do you have access to the company accounts?

Stheno

Mr. Loverman wrote: »

It sounds like the company has financial problems to be pulling something like this.

Is it a small company?

Do you have access to the company accounts?

It was a multinational making millions in profits in my case!

gerrymaguire

Thanks all for the advice.

Lets just say the company is one of the largest household names in fashion, sports and lifestyle so I'm not too worried about their financial situation.

I have been informed by Avis Fleet and two independent garages that leasing is not an option. I have been offered PCP plans but they work out very expensive and you are tied into one manufacturer unless you pay a large balloon payment at the end

It has been made very clear to us that this is an Ireland only issue as they claim cars are more expensive here than the UK and there will be no negotiation.

Interestingly the offer they have given is the same offer that they offered one of my counterparts in the UK last year but was withdrawn. So they have not taken this higher cost of cars in Ireland into the equation.

My annual mileage is 43,000 kms and I need to carry stock and samples so an estate or something of equivalent size is required.

gerrymaguire

blindsider wrote: »

http://www.carzone.ie/search/Volkswagen/Touran/BLUEMOTI/36313807194960710/advert?channel=CARS

€13500. Dealers won't want the car and will offer low prices, but even still.....The company certainly aren't doing you any favours! I'd probably steer clear.

How long have you been with the company? Are you worried about your future there? I know sales can be tricky in this regard.

Re financing - it's a tricky one. Maybe ask HR to give you 6 months payments up front to use as a deposit - then borrow/finance the rest?

Also, if you're worried re the job - consider buying an older car <€10K for the 1st yr or so and see how it goes...

Nuclear option - dust off the CV.....

Thanks blindsider,

I have been with the company for four years now. I'm not too worried about my future as I'm exceeding targets on a regular basis and look after four of the top five accounts in Ireland.

I have asked them about an upfront payment but the answer was a flat no.

My main concern is the lack of commitment from the company and the very large commitment expected from me and the team in financing vehicles.

blindsider

gerrymaguire wrote: »

Thanks blindsider,

I have been with the company for four years now. I'm not too worried about my future as I'm exceeding targets on a regular basis and look after four of the top five accounts in Ireland.

I have asked them about an upfront payment but the answer was a flat no.

My main concern is the lack of commitment from the company and the very large commitment expected from me and the team in financing vehicles.

Completely agree Gerry - it's a poor show. Sounds to me like the finance director has signed off on sth without any regard for the human aspect of the business.

S/he obviously never read Stephen Covey: "Treat your employees like you want them to treat your best clients!"

I'd be having words with your boss - say that you'd really like to see some support from the company re this.

I'd also speak to HR, and mention the phrase "psychological contract'" to them.

http://en.wikipedia.org/wiki/Psychological_contract.


Before you do though, I'd be actively looking for sth else. If there are opportunities out there, then great; if not you' may have to bite your lip and bide your time.

Best of luck with it!

road_high

Taken in the cold light of day this is a massive change and effectively is probably a large paycut.
Car was part and part of your package , now they want to remove that. And expect you to go out and buy a car from your own pocket to do their work.
I think I'd be sitting down with them and having a frank discussion. All the while updating my cv with a view to something else.

Stheno

road_high wrote: »

Taken in the cold light of day this is a massive change and effectively is probably a large paycut.
Car was part and part of your package , now they want to remove that. And expect you to go out and buy a car from your own pocket to do their work.
I think I'd be sitting down with them and having a frank discussion. All the while updating my cv with a view to something else.

At the mileage the OP is doing if he is getting 1e per mile, then that's an extra 43,000 he will be bringing in a year, tax free.

That should more than cover the cost of purchasing, insuring, and servicing a suitable car.

Even if it was 50 cent a mile (which would be rare) that's over 20k for him to fund a car in a year.

road_high

gerrymaguire wrote: »

Thank you very much for your reply.

There are five guys on the team and four out of five are very unhappy about the situation.

We were all informed via email at different times and have been told there will be no discussion and that this will be company policy going forward.

One problem we all face is the financial outlay on a vehicle with no guarantee of job security.

We have been given the opportunity to purchase the current vehicles but only at the companies valuations. To give an example a 2010 VW Touran with 147,000kms has been offered to me for €15,000. I have brought this vehicle to two dealers and both have valued it less than €9,000.

Lol at the price. €15k for an ex company Touran (not even a desirable model) with plenty if miles on. This is not an "offer", it's an insult IMHO! It's a trade car now so 15k is nuts.

road_high

Stheno wrote: »

At the mileage the OP is doing if he is getting 1e per mile, then that's an extra 43,000 he will be bringing in a year, tax free.

That should more than cover the cost of purchasing, insuring, and servicing a suitable car.

Even if it was 50 cent a mile (which would be rare) that's over 20k for him to fund a car in a year.

I'd say that figure is wildly optimistic, I good I'm wrong. I remember in previous roles I had the high rate dropped quickly once you went over a certain mileage.
His four year old car now has 147km on it, which I assume is a mix of business and private. Which is a long way from 43kmiles per year. Only the op can weigh this all up vs the mileage rate they are offering and what he does in business miles.

Stheno

road_high wrote: »

I'd say that figure is wildly optimistic, I good I'm wrong. I remember in previous roles I had the high rate dropped quickly once you went over a certain mileage.
His four year old car now has 147km on it, which I assume is a mix of business and private. Which is a long way from 43kmiles per year. Only the op can weigh this all up vs the mileage rate they are offering and what he does in business miles.

He's posted his mileage at 43k so even at 50c a mile it's over 20k in mileage he will be claiming?

TitianGerm

As far as I'm aware you are taxed on mileage received on any amount above public sector rates, ie 70c a mile.

Stheno

emmetkenny wrote: »

As far as I'm aware you are taxed on mileage received on any amount above public sector rates, ie 70c a mile.

Ah it was 1 e a mile when I last worked in the public sector.

70c a mile for 43k mileage is still 30k a year though

road_high

Stheno wrote: »

He's posted his mileage at 43k so even at 50c a mile it's over 20k in mileage he will be claiming?

Ah missed that part. Well if he does end up with 20 k (expenses are tax free too?) he would be likely way better off.

TitianGerm

Stheno wrote: »

Ah it was 1 e a mile when I last worked in the public sector.

70c a mile for 43k mileage is still 30k a year though

I know but just something to bear in mind. I also think that any payments that the company make towards the car may also be taxable as a benefit in kind

Stheno

emmetkenny wrote: »

I know but just something to bear in mind. I also think that any payments that the company make towards the car may also be taxable as a benefit in kind

No any car allowance that I have had is treated as straight income, you pay normal tax, prsi and usc on it.

So it's more than BIK.

However when I have had car allowances and been able to claim mileage it has always worked out better than having a company car and paying BIK etc for me.

blindsider

I posted the link to Revenue's current mileage rates on P. 1 - any payments above these figs are taxable!


From Revenue.ie

>1.5l engine
Up to 6437 km = .59c per km = €3737

Over 6437km = .285c per km

= 36563km x 0.285c = €10420

So 10420 + 3737 = €14157


This is also worth looking at:

http://www.theaa.ie/AA/Motoring-advice/Cost-of-motoring.aspx

IMO - if the OP is doing 43000km p.a. he would be better off with a company car.

Finally, the OP is being asked to finance this car himself - finding the cash for this is a big issue for many people these days.

Stheno

blindsider wrote: »

I posted the link to Revenue's current mileage rates on P. 1 - any payments above these figs are taxable!


From Revenue.ie

>1.5l engine
Up to 6437 km = .59c per km = €3737

Over 6437km = .285c per km

= 36563km x 0.285c = €10420

So 10420 + 3737 = €14157


This is also worth looking at:

http://www.theaa.ie/AA/Motoring-advice/Cost-of-motoring.aspx

IMO - if the OP is doing 43000km p.a. he would be better off with a company car.

Finally, the OP is being asked to finance this car himself - finding the cash for this is a big issue for many people these days.

14k is a fair whack when it comes to financing a car per year tbh
One place I worked in went from company cars to allowances and limited it to having a car less than four years old, so we all had to shell out on a car, but having 14k a year for three years, is more than going to cover the cost of most cars in that time.

blindsider

BUT - he has to pay for the car before he gets paid! He has to finance the loan himself!

The €14k is a gross figure.

So, add the financing costs, as well as servicing, petrol etc etc and the €14k (+ whatever allowance he gets) is not such a big figure.

If you look at the AA link you'll see what I mean about cost per km etc.

And..we haven't mentioned a heftier repair bill at all - and cars do go wrong.

As I said, I'd rather have the company car, thanks - and that is the OP's major gripe.

road_high

Yea the repair bills are a big big one. I spent thousands on a previous car with various repairs.
With a company car I've no such worry or outlay. That's before you get to the servicing and fuel... For any sort of big mileage co car is likely best. Plus putting big miles on a car you own will hit residuals even harder.