Was not sure whether to put this in the tax section or here as really I believe this instance to be a breach of contract. Basically, this is the predicament:
Our employer provides some of it's employees company cars due to the nature of their work, of which employees receive a company car (for which they are taxed accordingly) and also a company fuel card, for which covers their personal mileage.
The company deducts a nominal amount from each of the employees wages every month to cover the costs.
The company also actively promotes this benefit as a reason to work for them, and this is so in my case as well. In the real world, the legality of this however, is questionable as personal mileage, including communting to and from your place of work should be declared as a benefit in kind. This BIK has just become a major spanner in the works as this not only leaves the company open to legal action, but also the employee.
Need I suggest the complication for employees who have benefited from this scheme for some years as this would make them liable to additional tax from HMRC as well as adjustments and overpayments to Tax credits etc.
Now, in order to resolve this issue (bearing in mind that this is through no fault whatsoever of the employees), the company issued a memo stating that with almost immediate effect, the fuel cards will be recalled and a new scheme will be put in place that will only cover business miles.
This, in many employees eyes is seen as a major kick in the teeth. There are many employees who travel some distance to their work and have turned down other offers of employment due to this "free fuel" benefit.
I would like to know where we stand with this, basically, here is the legal side. In the contract of employment, it
"A car is provided for your use on business for the employer. A fuel card is issued to enable you to meet petrol costs. A monthly deduction from your pay of£x will be made to cover personal mileage (subject to increase)."
The simple fact that the contract states that a fuel card is available and only an increase in the allowance will be considered is not the part there is the issue with.
The Memo that was sent out states that the Fuel cards would be revoked - this i believe to be a change in the terms of the contract that should have been consulted with the employees, but it was basically forced upon everyone.
There are employees who will be out of pocket to the tune of £200+ per month in fuel costs and this will have to be met from their own pocket, although business mileage will be covered.
Bear in mind this came through a mistake by the company and not the employees and no cash alternative has been offered nor is it likely to be offered unless some sort of collective or formal action is taken.
Basicall what I want to know is:
- Can this be contrued as Breach of Contract by the Employer and should this route be pursued - albeit the implications of termination of current contract etc?
- Are the Employees now liable to inform the HMRC of this "mistake" so as to ensure the repayment of tax received that should have been declared i.e. PAYE TAx, tax credits etc and who should be liable for this?
- As the scheme was "promoted" as a perk to the employees, should the company offer to reimburse the employees who are now out of pocket?
Sorry for the long post, but any help would be appreciated as I feel that there are more implications and rights with regards to the employees as have been let on by our employer.