Jump to content

Knowles Salary Sacrifice Lease Cars - excessive penalties for returning cars early - help!

style="text-align: center;">  

Thread Locked

because no one has posted on it for the last 132 days.

If you need to add something to this thread then


Please click the "Report " link


at the bottom of one of the posts.


If you want to post a new story then


Start your own new thread

That way you will attract more attention to your story and get more visitors and more help 



Recommended Posts

Hi all,


I'm new here and not sure if this is the correct place or not.

We are after some advice on 2 lease cars on a salary sacrifice scheme.

My wife currently works for NHS. She is changing jobs on 26.01.2023 and moving out of the NHS.

We currently have 2 lease cars that are on a salary sacrifice scheme.

Unfortunately the company she is moving to does not have access to this scheme so the cars need to go back.

We are still within the contract period for the vehicles we need to pay a termination fee for both cars.

The total termination fee for both vehicles is £3600.82.

Obviously wife's decision to leave her job - although there are extenuating circumstances surrounding this. We fully understand we are contracted to the vehicles - however we have no way to pay this amount all in one go and upfront. Going to be completely honest as there is no point in not being, we have both had poor credit history in the past - I was declared bankrupt about 3 years ago no hope of me getting a loan or credit card to cover this. Wife not as bad, but still various defaults etc. We now live to our means and have zero debt but we can not afford to pay this upfront and all in one go.

The lease company are not being helpful. Just stated that we need to pay this before they will take the vehicles back, although they acknowledge that the wife can not keep them after 26.01.2023 as we will not be insured on them.  We have tried to enter a discussion about how we can pay this termination fee back and have offered £200 a month until it is paid off, but they just go back to it must be paid before we collect.

I/we are not sure what to do.

Any advice would be helpful.

We even stated they could take all of my wife's last months wages which would clear about £3000 off the debt but they just won't discuss it.




Link to post
Share on other sites

Who is the lease company?

How long is left on the agreement?

Have you put your offer in writing to them?

We could do with some help from you.



Have we helped you ...?         Please Donate button to the Consumer Action Group - The National Consumer Service

If you want advice on your Topic please PM me a link to your thread

Link to post
Share on other sites


1 car has 16 months and the other has 23 months - both were on a 36 month lease. 

 communication has been done in writing. We are being told they can't take it all of the last months salary as it would put my wife technically below minimum wage so they are not allowed to.

Link to post
Share on other sites

  • dx100uk changed the title to Knowles Salary Sacrifice Lease Cars - excessive penalties for returning cars early - help!

What are the actual words used in the contract in relation to early termination?

Link to post
Share on other sites

Estimated Early Termination Costs: Year 1: £2218.74 | Year 2: £1479.16 | Year 3: £739.58 (+ VAT in each case)

5. should you leave your employment or need to return the car during the contracted period of the Salary Sacrifice, under some
circumstances you will be liable for an early termination penalty in accordance with the rules of the scheme

They are the only 2 things I can find in the agreement that refers to the early termination fee

Nope, there is more - sorry this is quite long;

Early Termination of the Contract
100. If any of the following events occur the employee's right to a car within the scheme will discontinue forthwith. Any costs resulting from the early termination of the contract will be borne by the employer or the employee as described below:
a. The cessation of the employer's entitlement to possession of the vehicle under its agreement with the leasing company.
b. The vehicle for whatever reason becomes, in the opinion of the leasing company, uneconomic to repair and/or maintain.
c. The total loss, whether by theft or otherwise of the vehicle.
d. The termination of the employee's contract of service with the employer whether by virtue of death, voluntary resignation, dismissal, redundancy, retirement or otherwise.
e. The employee commits any breach of the terms of the hire agreement, express or implied.
f. Any meeting of the employee's creditors is called, or the employee commits any act of bankruptcy or any attempt be made to levy distress against the vehicle by reason of the employee's indebtedness.
g. Prolonged absence by the employee from their official duties.
h. The vehicle covering private mileage, which in the opinion of the scheme manager is abnormal.
i. Failure to pay money due to the employer from the employee under this agreement within thirty days of the same becoming due.
j. The employee becoming disqualified from holding or for any reason ceasing to hold a valid licence entitling him/her to drive a car.
k. In the absence of any of the aforementioned events, the expiration of the period of hire specified above, or any extensions of the same.
l. When, in very exceptional circumstances an employee applies to terminate their participation in the scheme.
m. The gross earnings of the employee fall below the national minimum wage (in the case of Salary Sacrifice)
n. Any other very exceptional circumstances not provided for in sub-paragraph a to m above.

101. If it is the employee’s choice to terminate the vehicle, the employee must provide the scheme manager with at least 2 months’ notice of their intention to terminate, failure to do so may result in additional costs which will be borne by the employee. 

Costs borne by the Employer

102. In the event of the employee's death in service or on early termination through capability due to ill health, due to either a long term/terminal condition which prevents the person working in the future (This will be for the employee to prove) there may be no financial penalty to the employee or their estate on account of the early termination of the contract. The employer will not be liable to pay early termination fees if dismissal through capability is linked to lateness, absenteeism, or persistent absence through illness or injury either or short or long term where the employee will be capable of future employment. Costs borne by the Employee

103. In the event that an employee is absent from work on sick leave, maternity leave or on approved training, the employee, if they are paying for their vehicle by salary sacrifice, may choose to continue the use of the car under salary sacrifice or switch to salary deduction. If the employee has contracted under salary deduction, they may choose to continue the agreement. If the employee chooses to return the vehicle to the employer, they will be liable for a financial penalty, on account of early termination of the contract, except in exceptional circumstances to be determined by the employer.

Change to employment conditions
104. If the employee leaves their employment and moves to another organisation the vehicle may transfer to the new employer with the new employer’s and current employer’s agreement and subject to agreement from the lease company and payment of an administration charge. If the employee changes jobs or voluntarily takes on a new role with their current employer, they may choose to keep the car.  If the employee chooses to return the vehicle, they will be liable for a financial penalty on account of early termination of the contract. If the employer prefers to terminate the contract under these circumstances, there may be no early termination penalty to the employee subject to the discretion of the employer.

105. In the event of early surrender of the car for any reason not covered above, the employee could be liable to pay the early termination charge imposed by the leasing company plus an administration charge. The calculation of the charge varies between leasing companies, the charge is higher in the first year and reduces during the contract. The actual cost will be provided by the scheme manager on written request. 
Note: It is very important that at least two months’ notice is given of early termination of the contract. Failure to provide
adequate notice could result in a delay in the final payment of salary due, in order to resolve any problems.

106. In the event of early termination detailed above, the employee will be liable to pay:
a. Any early termination charge plus administration charge.
b. Any outstanding insurance premium.
c. Any costs arising from the condition of the car or excess mileage on handover.

107. Employees are advised to seek advice before terminating this agreement.

Link to post
Share on other sites

I am trying to get my head around this a bit. Leasing contracts are really outside my sphere of experience – but on the other hand as far as I know, there are no statutory rules relating to this kind of contract – but maybe you can clarify.

If there are no statutory rules relating to this kind of contract then the contract must conform to ordinary contract principles and so that leads me to think that maybe the penalties really are "penalties" and that they are excessive and therefore unenforceable.

I understand that if you are unable to pay the penalty, you are not permitted to insure the car after 26 January. Nor are you permitted to return it. So effectively this means that if you can't pay the penalty, you are saddled with the vehicle which you are obliged to store – and of course you will have a legal liability to store it safely.
Is it stored on the road or off-road? If it is stored on the road then it will have to be insured – and even if it is stored off-road, it would be prudent to insure it because if anything happened to it you would have to reimburse the leasing company.

Please can you confirm whether my understanding of the situation is correct

Link to post
Share on other sites

Thanks for the reply.

In terms of the insurance it is all provided by the lease company. The payment that comes out of the wife’s wages includes insurance, servicing for the vehicles, repairs etc. It is an all in one payment - literally the only thing we have to do is charge the cars at our expense.

We do not have off road storage to keep both cars. Could keep one car on the driveway but wouldn’t get two on there.

i think they will come and remove both cars once my wife leaves her position. I see no benefit to them leaving us with the cars. They have already stated that once they take the cars back from us they go straight to auction, so I really can’t see them wanting to leave us with the cars - getting no lease money out of them and no sale value either.

What we are concerned or worried about is whether they would take us to court or something for the outstanding balance. As I said in the opening post they just don’t or won’t discuss payment at all. 


Link to post
Share on other sites

I think that I had misunderstood. You said that they would need paying off before they took their vehicles back. I understood from this that they were refusing to collect the vehicles unless you paid the money. I think that is wrong.

I'm still getting confused.

Can you just give me a few bottom-line figures.

How much do they want from you to bring it all to an end?
How much longer does the contract have to run?
How much would it cost you simply to keep the contract going?

Link to post
Share on other sites

Okay. So they ARE saying they won’t book the vehicles in for collection until we pay the early termination fee. However, come 26th January my wife leaves the NHS. As these lease money for these cars comes directly out of her wages when she leaves they will receive no more money. Knowles have also said to us that we can not drive them after 26th January as we are not insured due to leaving the scheme. We have told them we can’t afford to pay this all up front but they are refusing to negotiate. 

1 car has 16 months lease left and the other has 23 months. Both were on a 36 month lease agreement. 

The car with 16 months left they want £1805.23 to terminate. We would pay £4151.84 if we’re to keep the car under the current payments.


The car with 23 months left they want £1794.99 to terminate. We would pay ££6218.05 if we were to keep the car under the current payments.


As previously said though we have no options to keep the car. The wife is going into private health care and they do not allow for lease cars under a salary sacrifice scheme. 

Link to post
Share on other sites

So maybe I wasn't confused at all – simply incredulous that what I am understanding.

So I gather that if somebody decides to leave their employment – for whatever reason – then if the leasing scheme can't be transferred to a new employer because the new employer doesn't do that, then the leaseholder has to pay a penalty.
Not only that, if you can't pay the penalty because you don't have the money, then the leasing company proposes to leave you with an uninsured vehicle and which you aren't allowed to drive and of course which is on the road illegally.

I understand that there are absolutely no options at all to keep the vehicle if it is not being paid off as part of a salary sacrifice scheme.
Is that broadly it?

If you continue to the end of the scheme, does the vehicle become yours? Or is it then returned and presumably sold off?

How much is it per month for each vehicle?

Who is the legal owner of the vehicle? Presumably you are both down as the registered keepers

Link to post
Share on other sites

Yes, your first two paragraphs are exactly correct.

We have an option at the end of the scheme to purchase the vehicles if we had wished - but no fixed price it would be, from my understanding, market value at the end of the scheme. Failing that they would sell them at auction.

We are not even down as registered keepers. The lease company holds both the ownership and the keeper details. We know this because I, unfortunately, got a speeding ticket in one of the cars that took 3 months to get to me because Knowles were written to - being the registered keeper - and didn’t pass our details on.

Total per month for both vehicles is £539.84

Link to post
Share on other sites

And in respect of the speeding ticket, what happened? Do you have to pay some increased penalty because of a failure to deal with it? When did this happen?

Link to post
Share on other sites

Also, what do you reckon the market value of the vehicles is now?

Link to post
Share on other sites

Thank you for answering all those questions.

As I have said, I don't have any experience of this kind of contract at all. However it seems to me that it has to conform to the usual rules of contract because so far as I'm aware, this salary sacrifice idea is simply something which has been cooked up by finance companies and has no statutory basis.
I understand that your contract is with the leasing company and not with your employer. Is that right?

Regardless of the terms of the contract they must be fair. Contractual terms are subordinate to the statutes relating to unfair terms – the Unfair Contract Terms Act 1977 or the consumer rights act 2015.

Also, there are rules relating to breaches of contract and in particular, where penalties are levied for contractual breaches, they must normally not be extortionate/excessive and they must reflect administrative costs or losses caused by the contractual breach.
In my view it would be up to the leasing company to justify the penalties they are demanding.
It's interesting that in the terms and conditions they actually call these charges "penalties" – which is a silly mistake for them to make and whichever lawyer drafted that wording needs a good slap from them.
The terms and conditions that you have posted above also referred to "administrative" expenses incurred by the leasing company and so that suggests that the "penalty" is sheer profit or even a punishment intended to discourage you from breaching the contract.

In my view, the penalty would not only be contrary to the unfair terms provisions in the statutes and therefore unenforceable – but in any event, it would be contrary to common law as an excessive penalty – unless the leasing company could show that they had actually incurred those losses.

The leasing company has a duty to mitigate any losses and so their threat to refuse to accept the car back unless you paid a certain sum of money is outrageous and in my view it is unlawful.
Have they made this threat in writing? If they have them please will you post it here.

Also, their proposal to leave an uninsured vehicle on the road is scandalously unfair. This leasing company is regulated by the Financial Conduct Authority and that means that apart from anything else, they are subject to the rules contained in the FCA sourcebook and they have a duty under the Conduct of Business Rules – COBS – to treat you fairly and I don't think that they are.

Let us know more about this threat to leave the vehicle with you unless you pay the money.

Link to post
Share on other sites

Incidentally, no need to keep on quoting my posts. I know what I have said and don't need to be reminded

  • Thanks 2
Link to post
Share on other sites

This is part of the last email they sent regarding payment:

you must call me to pay your termination fee of £1805.83 no later than 4pm on 16/1/24.  Once the payment has cleared I will then pass you through to our Collections Team so that the necessary arrangements can be made.

I have now asked them directly in writing if they will collect the vehicles without payment of this termination fee. They have only previously stated this verbally, so am going to try to get it in writing from them. 

As for the vehicles being uninsured, I assume and it is only me assuming it, that the insurance will then transfer from us to Knowles on the 26th January? They have only stated we can’t drive the cars as we will not be insured from 26th January. My concern with this is if they leave the cars here for a month or so, who is responsible if they are damaged? We are no longer insured so how could we be held responsible?

It makes me think this is all a bluff by Knowles to force us to pay upfront. As i have said why would they leave cars here, knowing the wife has left the NHS so they have no further way of deducting money from her wages. Their assets if left standing here are deprecating by the day and then the risk of damage.

Link to post
Share on other sites

The whole idea of them not taking the vehicle if you don't pay is so backwards.

So what, they're left with no vehicle and no asset? Presumably you'd still have the keys to the vehicle and a quick check on the internet would say if it's taxed or not. What's stopping you taking out an insurance policy that covers the vehicle and using it anyway outside of some moral obligation?

Surely, the absolute first thing they'd do if you say you can't pay their "penalty" is take the vehicle back into their possession.

We could do with some help from you.



Have we helped you ...?         Please Donate button to the Consumer Action Group - The National Consumer Service

If you want advice on your Topic please PM me a link to your thread

Link to post
Share on other sites

If the company withdrew their permission for the vehicle to be used, then if the OP did ensure it and then drive it, that would at the very least be a trespass to the vehicle – and possibly even theft! Believe it or not.

Link to post
Share on other sites

Yeah, definitely not going to drive it after the leaving date, they have been specific on that;

Further to below, I understand from George that you are leaving on 26/1/24. If this date changes at all then you must let me know as you, or any named drivers, will not be insured to drive the vehicle after your leave date.

So, as I said I am assuming that it will still be insured - by knowles, just not for us to drive.

Link to post
Share on other sites

I suggest that we begin with the business of getting rid of the vehicles.

I think will be an idea to write to them and make it clear to them that on XXX date, you will not be driving the vehicles any more and in any event, you understand that they won't be insured for you to drive.
Point out to them that unless they made arrangements to collect the vehicles, the vehicles will be parked on a public road and it will be their responsibilities as the owners and keepers of the vehicle to ensure that they have the minimum insurance necessary to protect them but also to comply with the law.

Tell them that you want written confirmation of this immediately.
Tell them that you are so concerned that you are logging this as a formal complaint and unless it is properly resolved you want it brought before the ombudsman.
Remind them that whatever the issue is regarding payment of monies which they believe are owed to them, they have a duty to mitigate their losses and that means that they have a duty to deal with the vehicles as a separate issue to any financial dispute.

If this approach appears to you then draft a letter and post it here

  • Thanks 1
Link to post
Share on other sites


I will get a letter drafted over the next day or two and post it here.

They have asked yesterday - as we said we couldn’t afford to pay this all up front - what we could afford to pay on 16th January. I have not answered yet. To be honest until Christmas is out of the way I genuinely can’t answer how much. Would you recommend I just don’t reply to it at the moment and get the letter, once I have wrote it sent off to them?



Link to post
Share on other sites

I think that you should reply to them and express your willingness to engage but in any event you must make it clear to them that the priority for you and for them is to return the vehicles to them so that they can mitigate any losses by reducing risk to the vehicles while they are not in their possession and also by giving them the opportunity to resell them at the earliest opportunity.


Link to post
Share on other sites

13 minutes ago, S42010 said:

They have asked yesterday - as we said we couldn’t afford to pay this all up front - what we could afford to pay on 16th January. I have not answered yet.

Hope that wasn't on the phone... You should be sticking to written comms.

We could do with some help from you.



 Have we helped you ...?         Please Donate button to the Consumer Action Group The National Consumer Service

Link to post
Share on other sites

  • Recently Browsing   0 Caggers

    • No registered users viewing this page.

  • Have we helped you ...?

  • Create New...