Employer: What happens if an employee leaves their job or is made redundant?

Once signed, the Hire Agreement is non-cancellable following a cooling-off period of 14-working days following collection of the goods. This means that if an employee leaves or is made redundant from their employment during the hire period they are obliged to pay the remaining salary sacrifice amount in full from net pay i.e. without any tax exemptions.

For example:

If an employee is on a 12-month scheme, and have had 4 Salary Sacrifice repayments taken from gross salary prior to leaving employment, the remaining 8 should be taken from their final NET salary.

If the employee has benefited from Income tax and National Insurance savings they are still likely to be liable for an ownership (End of Hire) payment. However, the employee will never pay more than RRP for the bike in this scenario. 

For further information please see the Department for Transport’s Cycle to Work implementation guide: https://www.gov.uk/government/publications/cycle-to-work-scheme-implementation-guidance

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