Change in terms of employement

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

Peregrinus

gerrymaguire wrote: »

1. Is this a breach of contract?

Depends on the precise terms, but it’s very unlikely to be an outright breach. This is precisely the kind of incident of employment that may have to be reviewed or varied from time to time in the light of changing circumstances, tax and regulatory environment, etc.

gerrymaguire wrote: »

2. Do I have to accept it?

No. You can negotiate about it. It’s reasonable for you to expect to be no worse off, financially, under the new arrangement. Obviously, whether this will be so largely depends on (a) the size of the annual payment that they will make, and (b) whether there are any requirements or expectations about the kind of car you will provide yourself with. This is where your negotiation should focus. You could also negotiate about being paid mileage by your employer for motoring undertaken on behalf of the company.

gerrymaguire wrote: »

1. If I have to accept it, what would be the best way to go about financing a vehicle?

Well, you could turn this into a benefit for yourself. Up to now your remuneration has been partly received in the form of the use of a car (I assume you could always use the car for personal purposes, not just for work, so providing it was a benefit to you); now you’ll get cash instead, which you can either use fully to provide yourself with a car, or partly to provide a car and partly for something that is of more utility to you than a car. Cash is more flexible.

Financially, your best course is to spend as little as possible on the car. Think of the extra payment as a straight salary increase, and think of yourself as spending your own money on your own car. Don’t spend more than you need to; don’t buy a bigger or better (or newer!) car than you require for your professional and personal purposes. Don’t change the car any more often than you need to. Buy for cash, to the extent that you can, since borrowing, however it is done, costs money.

gerrymaguire

Thank you Peregrinus, very sound advice.