What Happens to Novated Leasing During a Company Restructure?

A company restructure; whether due to mergers, acquisitions, or internal realignments can impact the continuity of employee benefits like novated leasing. Here’s what you, as an employer, need to know to manage this process smoothly.

1. If Employees Remain Within the Same Entity

If your restructure keeps employees under the same ABN or business entity:

• Minimal Disruption: Salary packaging agreements and deductions for novated leases typically remain unchanged.
• Provider Coordination: It's still highly recommended to communicate this with your leasing provider, they'll know your business and the setup so any nuances to your setup can be taken care of. It'll ensure your employees feel a seamless continuity, and your payroll will have a clean stamp of approval.

2. If Employees Transition to a New Entity

For employees transferring to a new legal entity, the process may require additional steps:

• Adopt Salary Packaging: Ensure the new entity supports novated leasing as part of its benefits program. For example, if you're being acquired by another company - that company will need to implement novated leasing and liaise with the provider to complete setup.
• Facilitate Lease Transfers: You'll need to communicate with your leasing provider to transfer employee agreements to the new entity. They'll help ensure compliance with tax and salary packaging to avoid any unintended consequences.

3. In Cases of Employee Redundancy

Restructures sometimes result in redundancies. Here’s how to manage novated leases in these situations:

• To the novated leasing provider: Let the leasing provider know as soon as possible, as they can provide you with all the options your employees will have, and help you explore some flexible solutions, including lease buyouts or vehicle sale options.
• To employees: Inform the affected employees about their lease options, or let them communicate directly with the leasing provider. Usually this will mean transferring the lease to their new employer, with them continuing payments privately in the meantime.

Common Misconceptions Employers Have About Restructures

While they are very rare, a restructure alone can be stressful. A good novated leasing provider will ease some of that stress, while a bad one will add to it. With Clear Lease, the restructure isn't going to have a large impact on the benefit.

Misconception #1: “We’ll need to cancel all existing novated leases.”
We can smoothly transfer leases, whether under the same employer or to a new entity, provided an open line of communication with your business.

Misconception #2: “It’s too complicated to manage during a restructure.”
A good leasing providers will handle most of the administrative burden, making the process efficient and compliant.

Misconception #3: “Redundancies will leave employees stranded with lease payments.”
A redundancy is the main frustration, employees will usually take their lease to another employer though, or continue with private payments.

Your Provider Will Determine How Simple it is

At Clear Lease, we'll work with your restructure to ensure your employees retain their vehicles and benefits, provide clear communications throughout the process, and give our expertise on compliance to avoid any unintended consequences. specialise in managing novated leasing through organisational changes.