Workride
What is Workride?
Workride is a collaboration between Auckland, Wellington and Christchurch city councils and Cycling Action Network to get more people riding and living healthier lives by providing a payment scheme and discounted pricing for bikes, e-bikes and scooters.
It is a free ride-to-work benefit scheme to help employers ensure tax compliance and manage administration of a scheme. Staff will be able to select any new bike, e-bike or scooter from a Workride-approved store. Over a 12-month period, the new ride can be used while a salary sacrifice allows the employer to recoup the cost in full.
Find out more on the Workride website.
How can I sign up to Workride?
As an employer, you would need to register with Workride.
As an employee, you would need to make sure your employer is registered with Workride. If they are, you can head to a Workride approved store to pick out your bike, e-bike, or scooter, and the store will start the process.
For more information, please refer to the Workride website.
Setting up Workride payments
When the employer joins the Workride scheme, the employees are able to select and purchase a qualifying bike, e-bike or scooter and are then required to set up repayments to their employer. These repayments need to be deducted prior to PAYE and therefore must be entered as a salary sacrifice.
For employers:
Workride provide a savings estimator calculator on their website which you can utilise to work out the required payment.
If an employee is on a salary, you would reduce the salary by the total amount of the required annual reduction. If the employee is on wages the hourly rate will be reduced once the calculation has been worked out.
Example 1:
Salaried employee is on $78500 annually, required salary sacrifice is $2186.
$78500 – $2186 = new salary of $76314
Example 2:
Standard hours employee is on $32 dollars an hour, 8 hours per day, 5 days per week, repayment requirement is $48 a week.
$32 x 40 (hrs) = gross weekly total of $1280
$1280 - $48 = $1232
$1232 ÷ 40 (hrs) = new hourly rate of $30.80
If employee is on non-standard hours Workride advise that there are some practical considerations to be aware of. Especially for employees on zero-hours contracts where there isn't a guaranteed set of working hours, there might be periods without earnings or low earnings. This can make the salary sacrifice aspect challenging because, without a consistent salary, you as the employer might find it difficult to recover your costs. Your employee can still participate in the Workride scheme if you both come to an agreement that works for both parties.
How to enter the salary/wage sacrifice
1. Go to Employee details, Employee list.
2. Choose the appropriate employee and then click Employee payments (located under Employee details).
3. Under the Hours and Rates field, enter the new salary or rate, and its effective date.
4. Click Save.
Note: You would need to update the salary/rate once the Workride payments have been completed.
If you are unsure of the salary/wage sacrifice calculations or how to enter the salary/wage sacrifice, please contact Smartly's Helpdesk team on 0800 10 10 38.
Workride FAQs
1. What happens if an employee leaves before their salary sacrifice is completed?
If an employee leaves before completing their salary sacrifice term, they'll be required to pay a termination fee equal to the outstanding balance of the Total Cost. This fee also includes any extra taxes and levies that might arise due to the termination of employment or the cessation of the salary sacrifice. Employers have the right to deduct this fee from any due payments to the employee. If the deduction isn't feasible, the employee remains responsible for paying the termination fee through their net pay or a top up.
2. An employee has left their employment within the lease period and is unable, or unwilling, to complete their repayments to the employer despite the termination clause, what happens?
When an employee exits their role during the Workride lease period and is either unable or unwilling to complete their repayments, despite the termination clause, Workride has an established process to manage the situation.
During the lease, Workride holds the ownership of the ride, giving the employee exclusive possession rights. This ownership transfer to the employee as a gift is contingent upon either completing their salary sacrifice obligations or paying the necessary termination fee.
If an employee is unable to meet these financial obligations, the employer is initially encouraged to seek an internal resolution. This could involve negotiating a feasible repayment plan or a discounted payout of the outstanding balance, tailored to the employee's current financial situation.
In instances where an internal resolution isn't feasible, Workride's legal ownership of the ride enables a second outcome. Workride can assist in reclaiming the equipment from the employee who has defaulted and return it to the employer. Subsequently, the employer has the option to reassign the ride to another employee. In such cases, Workride facilitates the setup of a new lease agreement and revised salary sacrifice arrangement, ensuring the ride remains productively utilized within the organization and aiding in the recoupment of the employer's costs.
3. How does the salary sacrifice and workride work for the employer?
The Workride Benefit Scheme operates using a 'salary sacrifice' system. When an employee opts to forgo a part of their salary for a Workride-approved benefit, this deduction is made from their pre-tax income. As a result, the employee ends up paying less in PAYE, Kiwisaver, and ACC levy, which in turn leads to a reduced Kiwisaver and ACC levy bill for you, the employer.
4. How does workride reduce the cost of getting a new ride?
Workride uses a 'salary sacrifice' approach. Employees divert a portion of their pre-tax salary towards a benefit, like a bike or scooter. This means employees are taxed on a reduced salary, leading to direct Income Tax savings. Additionally, this setup impacts their KiwiSaver and student loan contributions. So, while these aren't tax savings, they reduce the employees' out-of-pocket expenses. In total, Workride offers tax savings and restructures your earnings to make getting a new ride more affordable.
For more FAQs, please check the Workride website.