Tesco Cycle to Work scheme

[Stygimoloch]

I’m wondering if anyone has any advice or has experienced similar regarding the Tesco Cycle to Work scheme.

My husband works for Tesco and applied for the scheme back in March. He was accepted and bought an electric bike worth £800. He doesn’t drive and his normal bike was causing him pain to a long standing knee injury. He was supposed to be paying back £32 a month which is affordable for him.

However, he has received letters since each month stating that the deduction cannot be taken from his wages as it would put him under the national minimum wage. This has just happened for the fourth month in a row. The problem seems to have been caused by the NMW going up in April.

He’s been going back and forth with them and there is nothing that can be done according to Tesco. After 6 months of this, so in 2 months time, they are going to take the whole £800 out of his wages!

£800 will really decimate his wages for that month.

We do have savings and I can prop him up but how can this be reasonable? They won’t take the money each month because he’ll fall below NMW but they are happy to take the whole lot in one go without a thought to the position that might leave him in. What if it was someone without savings or a partner to help? Tesco won’t provide any more responses and it seems we are where we are. He never would have applied in the first place if he knew. The whole point was that he couldn’t afford that much in one go.

Just for extra context, we have separate finances for many reasons, although the savings are family savings.

Anyone have any experience with this or any advice? Thanks!

Salary sacrifice is an agreement to give up some salary in exchange for another benefit, in this case the provision of a bike. You can’t legally sacrifice salary below NMW, because the company has to pay at least NMW.

Taking the £800 in one go wouldn’t then be salary sacrifice, it would be a deduction from net pay and this is why they can do it. The benefit of salary sacrifice schemes like cycle to work is the monthly pre tax deduction (spreading over a longer period and saving tax and NI) but the £800 unfortunately wouldn’t be.

Tesco really shouldn’t have allowed your husband to take out this salary sacrifice scheme if it would have brought him below NMW. I’d be interested if there was any paperwork or agreement your husband signed otherwise this is the only thing you can challenge them on. They would be breaking the law allowing the salary sacrifice unfortunately.

To add however I don’t see why they couldn’t agree to a more manageable net deduction - eg £800 over 12 months being £66 a month.

Tesco should have been aware of salary sacrifices that breach NMW rules.
As the guidance has been in place for years as see the Government update from July 2021 here:
https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

I'm very surprised that HR/PayRoll allowed him to do salary sacrifice, someone has made a huge mistake & I don't see why it should be your DH's problem to solve.

Is your DH in Usdaw? I would suggest speaking to a union rep or contacting their legal line about what Tesco should be doing to sort out their mistake.

Thank you all so much for the advice and links. He isn’t in the union but I think it’s worth him joining for some advice.
He’s been told that the NMW was raised in April and he applied shortly before this so before the raise he would have been ok. I guess they will get around it by saying this.

I'm wondering if there's a way round it?
Instead of Tesco doing it as a salary sacrifice scheme, wonder if they can retroactively change it to a benefit deduction scheme or something along the rules of a company car but in this case company bike?
So that money to be repaid for the bike is taken out of his net pay after NI & Tax not gross pay.
Obviously still in instalments

@TracyBeakerSoYeahthank you. Hopefully. Turns out he is a member of the union. He’s emailed them and will try and speak to a rep tomorrow.

I just feel so mad they would allow him to be in a position like this. It feels very unfair. We are lucky in that we can pay all in one if we have to but what if we couldn’t?

It is unfair & regardless of whether you can afford to pay it back in one go is neither here or there, and is particularly bad now that we're coming up to Christmas.

Pleased that your DH is in Usdaw & hope it gets sorted quickly!

If he applied 'just before' the NLW was raised then the post April 2025 figure was public knowledge and the employer should have seen the issue.

He also needs to understand who will own the bike going forwards as under C2W rules it's leased and to own you need to pay for it. The trick there is to just hang on to it as its value dwindles to nil after about 5 years.