EV Salary Sacrifice: Minimum Wage, Sick Pay and Leavers - An Employer FAQ

Two questions come up in almost every scheme rollout conversation: “what about our lower-paid staff?” and “what happens if someone goes on long-term sick leave?” Both have clear, sourced answers below. This is general guidance, not legal or tax advice - for a specific employee's situation, loveelectric confirms the position directly.

The National Minimum Wage floor: who can and can't take part

Salary sacrifice can never reduce an employee's pay below the National Minimum Wage or National Living Wage - this is a statutory requirement, not a loveelectric policy choice (Source: gov.uk). Under our Supplier Agreement, your business bears full responsibility for ensuring that an employee's gross salary doesn't fall below the National Minimum Wage as a result of the Rental. For 2026/27, the National Living Wage for employees aged 21 and over is £12.71 an hour, from 1 April 2026.

In practice, employees at or near minimum wage may not have enough headroom to sacrifice the full cost of a car. Eligibility is self-certified by the employee - loveelectric doesn't run a personal credit check - but the NMW floor itself is a hard limit and employees will only be shown vehicles which they can comfortably afford.

If pay drops below NMW after the lease has started, what happens depends on why. Qualifying long-term sickness is covered below. If you're approved for funding with Lex Autolease; reduced hours, a career break, secondment, or a general pay cut - the standard fee applies instead: 50% of remaining lease payments in the first three months, three months' rental after that It isn't automatically fee-free just because the trigger is a drop below NMW.

Long-term sickness and statutory sick pay

Long Term Sickness Absence - where an employee's salary falls below the National Minimum Wage once the monthly rental is deducted - is, like death, covered directly by the funder under the Master Hire Agreement. No Employee Commitment Fee* applies.

Statutory Sick Pay for 2026/27 is £123.25 a week, or 80% of average weekly earnings if that's lower (Source: gov.uk).

Either way, the employer should notify loveelectric as soon as long-term sickness begins, so we can confirm which situation applies and handle the process from there.

The Employee Commitment Fee:

• First 3 months of the lease: Three months' cost of the rental of the particular vehicle

• Month 4 onwards: One month's cost of the rental of the particular vehicle

When an employee leaves: the short version

Resignation, redundancy and dismissal are supported by the Zero Risk Guarantee: your business is liable to loveelectric for a capped Employee Commitment Fee - one month's rental from month four, three months' rental before that - recoverable from the employee's salary at your discretion . Death carries no fee, under the leasing company’s Master Hire Agreement. Maternity, paternity, adoption and shared parental leave follow different rules - see our dedicated parental leave guide. For the full breakdown, including Zero Risk Guarantee eligibility conditions, read What Happens When an Employee Leaves.

A quick provider-vetting checklist

Before signing up to any EV salary sacrifice provider, it's worth asking directly:

• How do you check that a proposed deduction won't take an employee's pay below the National Minimum Wage - before the scheme starts, and if their pay changes later? If you choose loveelectric, we automatically do this for you within the platform. No employee is able to order a car that brings them below the threshold, so you don't have to worry about working it out or tracking pay.
• What happens to the fee if long-term sickness takes an employee's pay below NMW?
• Which mid-lease pay changes are treated as fee-free, and which aren't?

Frequently Asked Questions

Q: Can you salary sacrifice on minimum wage?

A: Not if it would take pay below the National Minimum or National Living Wage - that's a statutory limit. The loveelectric platform automatically filters out vehicles that would bring an employee's pay below the threshold. This is on the condition that the business has checked and confirmed the salary of the employee is correct at the point they submit an order for a car.

Q: What happens to salary sacrifice during long-term sick leave?

If you are approved funding for Lex Autolease, then Long Term Sickness Absence - where an employee's salary falls below the National Minimum Wage once the monthly rental is deducted - is, like death, covered directly by the funder under the Master Hire Agreement. No Employee Commitment Fee applies.

Q: If an employee's pay drops below NMW mid-lease, is there always a fee?

A: Yes. The support offered depends on the reason and how long the employee has had the lease for. Reduced hours, a career break or similar fall under the standard fee for that scenario. 

Q: Does the employer carry any cost if an employee leaves or falls ill long-term?

A: For resignation, redundancy and dismissal, your business is contractually liable to loveelectric for the capped Employee Commitment Fee, but can recover it from the employee's salary at its discretion - so it needn't be a net cost.

The NMW floor, sick pay and leaver rules are all manageable with a provider that has a clear, documented process - which is the point of publishing the actual figures rather than a vague “speak to us” answer.

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