A novated lease is a three-way agreement between an employee, their employer, and a finance company. For employers, offering novated leasing as part of a benefits package can enhance staff satisfaction, reduce administrative overhead compared to traditional company vehicle models, and contribute to a positive workplace culture. At Fingo, we support employers in understanding and facilitating novated leases — through innovative tools and transparent processes that help businesses get the most out of the offering.
What Is a Novated Lease and How Does It Work?
Understanding how novated leases work begins with recognising the key relationship between the employee, the employer, and the finance provider. In this structure, the employee leases a vehicle and the employer agrees to take on the lease payments and associated running costs as a deduction from the employee’s pre-tax salary. This arrangement is formalised through a deed of novation, which transfers the lease obligations from the employee to the employer while the employee remains the primary vehicle user.
From an employer’s perspective, this type of arrangement is salary packaging — not a company car scheme. The vehicle is not an asset or liability on the employer’s books. The employer simply facilitates payroll deductions for the lease and associated running costs (such as fuel and maintenance), while the employee enjoys private use of the car.
Why Should Employers Consider Offering Novated Leasing?
Including novated leases in your employee benefits program can set your business apart in a competitive job market. Here are some of the reasons many Australian businesses, both large and small, include novated leasing as part of their workplace offering:
1. Boosts Staff Retention and Satisfaction
Employees value flexibility, especially when it comes to salary packaging. A novated lease enables them to drive a vehicle of their choice without the burden of a traditional car loan or upfront costs. It also gives them full control over their vehicle selection and usage.
Employers who offer novated leasing demonstrate that they understand their employees’ needs and are willing to provide practical benefits that make everyday life easier. This can contribute to a more positive perception of the workplace and higher retention rates.
2. No Asset Liability
Because the vehicle is leased and not purchased by the company, it doesn’t appear on the business’s balance sheet. There’s no obligation for employers to manage depreciation, disposal, or fleet resale. This makes novated leases especially appealing to companies looking to avoid the costs and responsibilities associated with maintaining a company car fleet.
3. Streamlined Administration
Novated leases are typically managed through a third-party provider, like Fingo – your trusted industry partner, we handle the bulk of the administration — including finance approval, insurance, vehicle sourcing, and maintenance scheduling. Employers are only responsible for facilitating payroll deductions and may receive basic reporting from the lease manager for compliance purposes.
This hands-off model minimises HR and finance team workloads, making it easy to implement even in smaller organisations.
Employer Responsibilities in a Novated Lease
While novated leasing is low-touch for employers, there are a few responsibilities that businesses should understand and prepare for:
- Payroll Deductions: Employers must set up and maintain accurate deductions for lease repayments and operating costs from the employee’s salary each pay cycle.
- Novation Agreement: The employer must agree to the novation deed, which outlines their role in the arrangement.
- Ongoing Coordination: In some cases, employers may need to communicate with the finance provider or novated lease administrator in the event of an employee leaving or changing employment terms.
It’s also important for employers to note that if the employee leaves the business, the lease obligations revert back to the employee. This ensures there is no long-term financial liability for the company.
Fingo’s Role in Novated Leasing Support
Fingo helps employers and employees understand how novated leases work by offering tools, resources, and dedicated support. While Fingo is not a finance provider, our platform is designed to simplify the novated lease journey with accurate calculators, information hubs, and connections to reputable leasing providers.
Employers can refer staff to Fingo to access quotes, learn about their options, and take the next steps in securing a novated lease that suits their lifestyle and budget.
Final Thoughts
A novated lease is an efficient and flexible way for employers to offer value-added benefits to staff without significant overhead or risk. It empowers employees with greater control over their vehicle choices, while the business benefits from minimal financial exposure and streamlined administration.
Fingo supports this process by connecting both employers and employees with trusted resources and tools. By offering novated leasing as part of your employee benefits, your business can demonstrate a commitment to flexibility, convenience, and modern workplace expectations — all while maintaining a lean and efficient HR model.