The retail reality: Car Salary Sacrifice
By Phil Gillespie, Head of Commercial Partnerships, Tusker and Laura Mannick, People & Culture Manager, Popeyes
Retailers are under pressure from both sides. Business costs continue to rise, while employees are looking to their employers for support with everyday expenses.
Subscribe to TRBWith the cost of living still high, particularly for fuel, travel and commuting, affordability is a major concern for many in the retail sector. As a result, HR and reward teams are implementing benefits that genuinely support employees’ financial wellbeing and day-to-day lives. Crucially retailers need to do this without generating further costs for a sector already feeling the pinch of rising National Minimum Wage and National Insurance costs.
One effective route is implementing a car benefit scheme which enables employees to boost their tax efficiency whilst gaining access to a new vehicle.
Traditional company car schemes and fleet providers still have a role to play, but they can be expensive, admin heavy and often don’t provide the flexibility and choice needed by employees. Indeed, many retailers are considering alternatives to company cars such as cash allowances. This is transition is improved when complimented with the Car Benefit scheme as employers can reduce the cost of that cash provision (due to employer NIC savings). Equally it provides the employee a cost effective option of using that cash in a way which is still akin to the company car (an inclusive car which is maintained, serviced insured etc)..
Saving employees’ hard-earned money
The retail sector is one of the UK’s largest employers, supporting approximately 2.9 million jobs. However, the British Retail Consortium reveals that one in ten of these jobs – up to 160,000 roles – are at risk of being lost over the next three years as a result of the rising costs of employment, often driven by rising employer National Insurance Contributions (NICs) and National Living Wage.
Against this backdrop, household budgets are under pressure, with transport emerging as one of the largest monthly costs after housing. Offering a Car Benefit Scheme enables employers to help employees make their money go further, by providing tax-efficient access to electric vehicles (and potentially ultra-low and low emission cars) with no upfront costs.
A fixed monthly amount often includes maintenance and insurance, so these schemes allow employees to budget effectively and support financial wellbeing.
Popeyes UK, the New Orleans-born chicken QSR brand, partnered with Tusker to offer the car benefit scheme to its eligible emp
loyees.
Car benefit schemes have become a highly valued benefit. Even just a few months after launch, 12% of the eligible employee population have taken delivery of their new car with great feedback from employees as having this as an option of employee benefit. As Popeyes continues expanding, the scheme is helping support a more dispersed workforce (including operational and management teams travelling between locations) by providing a practical and cost-effective benefit, which can support their financial situation. To announce the benefit, and reward high performing managers, Popeyes took the decision to do a “free car giveaway” offering a two year car agreement as the top prize in its employee Carnival celebration.
Unsurprisingly, securing leadership buy-in was crucial. By clearly demonstrating both the employee benefits and the potential return on investment, Popeyes people team was able to build strong support for the scheme. The positive engagement levels seen so far are showing clear value for employees and the business alike.
Talent attraction and retention
Offering a range of vehicle options in a car salary sacrifice scheme is a powerful tool when it comes to talent attraction and retention efforts in the retail sector.
It’s important to remember that employees’ lifestyles and circumstances are very different, so a one-size-fits-all approach is often not effective. For example, not everyone has access to off-street parking, and the nature of some journeys means an electric vehicle may not yet be the most practical choice.
Choice is therefore important. Part of the decision to appoint Tusker was that it allowed the choice to offer a broad range of new and pre-loved vehicles, including ultra-low and low-emission cars, small city cars and EVs.
This flexibility ensures the scheme is as inclusive and accessible as possible, enabling employees to select an option that best suits their individual needs. Popeyes’ salary sacrifice scheme, for example, was designed to be inclusive, offering EVs hybrid vehicles to ensure it worked for employees in different circumstances.
Just as importantly for retention and attraction, the scheme is treated as part of the wider employee experience, not a standalone initiative. By keeping it visible and integrating it into broader reward and recognition activity, it becomes embedded in everyday culture rather than as a one-off benefit.
Employers immediately see ROI in costs and ESG
Beyond the benefits for employees, salary sacrifice schemes can also deliver a significant financial return on investment for employers.
One retail employer that launched the scheme less than 18 months ago, for example, is already projecting between £5.7 million and £6 million in Class 1 National Insurance savings through offering a scheme to employees.
While the exact return will vary depending on the size of the eligible workforce, there is clearly potential for significant cost savings.
Achieving that return, however, depends on creating a programme that not only delivers value for employees, but also supports the organisation’s broader objectives. One of these key objectives is ESG and sustainability requirements.
A good example of this is offsetting emissions as part of a salary sacrifice scheme. Internal combustion vehicles tailpipe emissions are offset, while EVs emissions associated with electricity consumption during charging are offset. This approach helps retailers meet their sustainability goals and provides clear data and reports to track progress.
Reducing risk through lifestyle protection
Risk is a key consideration for any employer, often centred on “what if” scenarios such as resignations, redundancies, relocation, or life events like long-term sickness or maternity leave.
Having lifestyle protection in place reduces risk for both employees and employers. Perhaps an employee resigns or there’s redundancy or a health issue, so a car needs to be returned early. Some schemes, like Tusker’s, mitigate employer risk meaning that in almost all cases a car can be returned early without any cost being incurred by employee or employer. Equally provision is available to cover the cost of a car for a period if people go on long term sick or maternity leave, so again neither party is penalised.
This removes the ‘what if’, giving employers the confidence to offer the benefit, whilst giving employees peace of mind about the next steps if their circumstances change.
For Popeyes, the key was balancing employee impact with financial considerations. When presenting the scheme to senior leaders, it was important to demonstrate not only the upfront costs but also any potential long-term risks or hidden liabilities. Having confidence that these were understood and managed provided reassurance that the scheme would deliver value for employees while remaining financially sustainable for the business.
The secret to success? Listen to your team
The success of any benefits initiative comes down to one simple question: is it something your people want and will use? Given the increased popularity of the benefit in the sector, including adoption from some of the largest grocers there’s strong evidence to support demand.
When introducing a new employee benefit, retailers should start by listening. Understanding employee needs ensures initiatives are relevant and valued, and a feedback-led approach helps ensure the right fit from the outset, improving engagement and avoiding underused or short-lived programmes.
Benefits need to be seen as part of a wider people strategy, not in isolation. When integrated across wellbeing, reward, engagement, sustainability, and talent attraction, they deliver greater organisational impact and long-term value
