As more people face long commutes, helping staff travel to work – either practically or financially – can be an important recruitment and retention tool. Peter Crush reports
If there are two big trends affecting the world of employment it’s that rising house prices are driving staff further away from their place of work, leading to soaring commuter costs.
The average daily commute for Britons is now an hour and 38 minutes. Living further away from the office means the average cost of commuting is now £160 per month – or 21% of the average mortgage (source: Moovit).
With a London-Oxford season ticket now an eye-watering £4,944, it’s no surprise that a recent survey by CV Library of 11,000 employees found 73% believed commuting time should be included in their pay, or that employers should help out financially.
“Despite all the talk about flexible working, employees feel like they’re becoming more dependent on travel, and so with this is an increasing expectation that their employers should proactively help them with their travel costs,” says Manesh Patel, senior consultant at AON Employee Benefits Centre of Excellence.
“We’re seeing a correlation between the fact that as employers have to widen their geographical search to find people, they also need to offer them a means to get to the office once they’ve been given the job.”
Traditionally, standard types of assistance has included season ticket/rail card loans – whereby the employer buys a discounted annual ticket up front and allows employees to pay it back monthly through payroll; or options such as shuttle buses from a nearby station. The limit for loans is £10,000, and ticket assistance has to be a loan rather than salary sacrifice.
Other alternatives include cycle to work schemes and, of course, fleet, where salary sacrifice is allowed, and which is boosting new car ownership.
None of these options are flawless, though. “Car salary sacrifice does come with its own risks,” concedes Jon Burdekin, head of product development at Alphabet. “If staff leave, the car becomes the employer’s problem, while there are extra costs that could be incurred through damage or excess mileage. It’s definitely not an arm’s-length benefit, it’s one that needs management.”
There are issues with other arrangements, too – such as car shares. Although they’re increasingly corporate-sponsored, they require a buddy system, the continued support of staff to drive their colleagues in, and processes for what happens if a driver has to suddenly go home, leaving their passengers stuck at work.
Thinking beyond the obvious
However, with the cost of travel becoming a key factor in whether a candidate will even consider a role, employers are being forced to seek different solutions.
“It’s a shame the government effectively got rid of salary sacrifice for bus travel,” says James Malia, the managing director of P&MM Employee Benefits. In 2013, the government reduced the scope for using salary sacrifice in conjunction with subsidising local bus services.
“So, we’re seeing increasing demand for other solutions like car parking – where employers buy permits that staff can have at a discount rate. The view is, that if employees do have to drive, it needs to be made as easy as possible for them.”
Cycle-to-work schemes – while not new – are still an option for those who may be quite local to the office. An intriguing statistic is that while cycle sales have fallen 5% in the past year, cycle to work numbers are up 3%, suggesting more employee demand than necessarily consumer demand. Such a scheme is quite easy to set up, and staff can get up to 45% off the price of a bike.
But is this really it? Well, not necessarily. There are moves to try and take travel assistance to the next level.
Patel says: “We’re seeing firms explore leisure travel perks – such as travel insurance – being offered on top of their business travel assistance.
He adds: “As well as simply providing another type of benefit such as fuel cards [these allow the employee to fill up and have the amount billed back to their employer] we’re also seeing other innovations – like hotel vouchers and eating expenses, because that’s all part of the travel these people, particularly salespeople, are doing.”
Adding value to cars
In the fleet sector, there is a growing focus on elements that add value.
At Alphabet they call it AlphaDrive. It’s a form of employee car ownership – ECO rather than salary sacrifice, but which doesn’t attract benefits-in-kind taxation.
“The real plus here is that it’s much more arm’s length,” says Burdekin. “The car is employee-owned from the beginning rather than having to go through a ‘novated’ leasing arrangement if the employee leaves. This means that if they do leave, they take the car with them and continue the relationship with the new employer.”
While a downside is not having it via salary sacrifice, employees still benefit from corporate discounts from the manufacturer.
Burdekin adds: “Salary sacrifice is starting to come under threat. Many people don’t want to sacrifice such a large percentage of their official salary, because it has implications for their pension – particularly if they work in the public sector. This form of travel assistance won’t hit them in the same way.”
Some providers are also re-visiting other areas that haven’t been a success. For instance, electric vehicles suffer from small take-up – not because people don’t like them but because of the times when they need a car to make journeys that limited-range electric cars can’t manage – such as holidays.
Rather than have staff miss out of the financial savings a zero-emission vehicle offers, Fleet Evolution has developed Electric Flex, which enables staff to nominate a number of days per year when they predict they’ll need a traditional car. This is then worked into their salary sacrifice package, so that they are electric for most of the year, and petrol/diesel for the times they need it.
“Staff focus on the days when an electric car won’t work for them, rather than seeing that for most of the time electric’s the perfect solution,” says Fleet Evolution’s managing director Andrew Leech. ‘With this, electric can be offered as a genuine choice, and one that fits with a green lifestyle.”
Bringing it all together
But arguably, the biggest innovations could be online/mobile, with apps. Early forays into creating rewards around different types of travel (such as BitWalking Dollars awarded to people who take 10,000 steps per day) have never really taken off because of the difficulties of converting a virtual currency into something tangible.
However, developers in the UK have recently launched an app that rewards people with discounts in real shops if they walk or cycle somewhere. Called ‘CleanSpace’, users can claim free coffees or discounts at selected retailers, depending on how many ‘clean’ miles they accomplish. One mile gets a free coffee at Upper Crust, 15 miles unlocks a £5 credit towards PayasUgym, while 130 miles gets a £5 voucher to use at Prezzybox.com.
Although the app is free, employers could promote it, and create staff league tables and additional incentives for miles cycled.
And there’s more to come. Burdekin says: “We believe the future of travel assistance isn’t just getting help with a car, a train, or a bike in isolation, but getting help with a blend of them. We’re working on an app that’ll suggest the best form of travel – be it train or car, and then gives people discounts for accessing it. The plan is that people start off with, say, a £5,000 float, and then the app plots their best journey/purchase options for them. This will really be bring travel assistance to an individual level.”