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HR tip: Reducing company car standard

by
31st Jan 2008
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These questions are being answered by Learn HR, a market leader in the provision of HR and payroll training and nationally-recognised professional qualifications.

Question:
"As part of a move to reduce operating costs, we intend to lower the standard of the cars that we provide for certain employees. Is this safe?"

HR tip:
That depends upon what is written in the contract of employment or in the conditions about provision of the car. If the contract states that the employee will be provided with a six litre Bentley, that is what you must provide or, if the model is no longer in production, an equivalent vehicle.

If the contract is not specific about the model, but the car is provided for the exclusive use of the employee for both business or private use, the employee would have a right to expect a broadly similar model on replacement and, should you wish to reduce the standard, you should agree this with him or her.

If you have a sound business reason for reducing the standard of vehicle, hopefully you will be able to persuade the employee, but if you fail, your recourse will be to terminate the employee's contract of employment and offer a new contract embodying the lower car standard without any break in service. This may be more trouble than its worth, so good luck with persuasion.

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