Why commutes are costing you your best talent

Employees at the fuel pump are noticing that it costs more than it did last month. While they reluctantly pay £80+ for a tank, they’re probably thinking about how much more everything costs now, including just getting to and from work.

Car commuters aren’t alone. Rising public transport costs are quietly eating into people’s take-home pay at a pace many employers haven’t noticed.

For employees, it’s another dent into their finances. For employers, it’s quickly becoming a quiet retention risk. In fact, 14% of employees are already considering changing jobs because of their commuting costs.

You can understand why, with average car commutes costing UK employees £2,228 a year. Meanwhile, some employers are asking their people to come back into the office, whether five days a week or on a hybrid basis, without the additional support to help with the cost. 

The instinct when faced with this is to look at pay increases, which we know are often not possible or really solve the problem. There’s a smarter option available: employee benefits.

Electric Vehicle salary sacrifice schemes allow employees to lease a brand-new or approved-used electric car, with the cost deducted from their salary before tax and National Insurance. 

This is a valuable benefit for employees and can uncover some serious savings. Research from the Energy and Climate Intelligence Unit (ECIU) found that it costs £677 more a year to run a petrol car than an electric equivalent – and that gap is looking likely to widen. For employees feeling stretched by the cost of their commute, switching to an EV through their employer isn’t just greener – it’s significantly better for their pockets.

Beyond the fuel savings, there are other big benefits of offering EV salary sacrifice:

For employees:

• No deposits or credit checks needed
• One monthly cost that covers insurance, MOT, servicing and breakdown cover
• Taken straight from salary which helps with budgeting

For employers:

• A ‘magnet’ benefit that employees love and keeps them in roles
• Potential employer National Insurance savings
• It supports carbon reduction initiatives and targets

For employees who live within cycling distance of work or the train station, a Cycle to Work scheme offers a simple, accessible and popular commuting alternative.

Through the scheme, employees can access a new bike and safety accessories with monthly instalments coming directly from their salary. Like the EV scheme, there are no upfront costs or credit checks.

It’s one of the most consistently popular benefits on the market, and it’s easy to see why.

Employees love it:

• A cost-effective and sustainable alternative
• An active commute has huge health and wellbeing benefits
• Access to a range of different bikes and safety equipment through the scheme, including e-bikes, adaptive bikes and more

Employers love it:

• It supports carbon reduction initiatives and targets
• Helps build a culture of wellbeing in the workplace
• It uncovers employer National Insurance savings

Salary sacrifice schemes are highly valued benefits. They’re tax-efficient, with tangible savings for both employers and employees. As ‘magnet’ benefits, they help keep employees in roles.

With Perkbox, offering the schemes is straightforward, with the benefits accessible through one app and instalments taken directly from their salary without additional credit checks or admin.

When budgets are tight, it can be hard to justify investment to your budget holder, but it’s a conversation worth having.

Replacing an employee is expensive, when recruitment fees, onboarding, lost productivity are all factored in.

When the average cost of replacing an employee is £30,000, the maths is hard to ignore. Benefits that help your people tackle commuting costs don't just help to improve retention —they pay for themselves the moment they keep one person in their seat.

Offering a pay rise is great if you can. But employers who recognise the challenges their people face, and provide them with options to help tackle it, are the ones that’ll hold onto their best people - while others switch to employers that do.

Want to learn more about helping your people tackle commuting costs? Watch our on-demand webinar to hear from experts on how EV salary sacrifice and Cycle to Work schemes work in practice.