Can an Employer Say No to a Novated Lease?

Can an employer say no.

Novated leases are a popular way for Australian employees to finance a car via salary packaging. But what if your employer says no? Can they refuse to offer novated leases? The short answer: yes, employers can say no. This blog explains why, what rights employers have, common refusal reasons, tips to help you get approval, and alternative options if the answer remains no.

Employer Rights and Reasons for Refusal

Employers are not legally required to participate in novated lease agreements. While novated leasing offers benefits to both employees and employers, businesses have their own reasons for refusing:

  • Company Policies & Administrative Burden: Some businesses, especially smaller ones, avoid novated leases because managing them adds complexity to payroll and compliance processes.

  • Financial Considerations: Though employees cover lease payments from pre-tax salary, employers might be concerned about reporting and administrative costs or compliance risks.

  • Existing Salary Packaging Providers: Employers may already have agreements with specific providers and may not want to complicate their existing systems.

  • Resource Constraints: Small to medium businesses may lack the resources or expertise to implement novated leases.

  • Industry or Organisation Restrictions: Certain sectors or employers (e.g., government or not-for-profits) may have strict policies about salary packaging options.

Why Employers Should Consider Novated Leases

If you’re negotiating with your employer, it helps to know the advantages for them:

  • ✅ Attract & Retain Talent — Offering novated leases makes the benefits package more competitive, improving employee satisfaction.

  • ✅ No Direct Cost — Lease payments come from your pre-tax salary, so the employer isn’t financially burdened.

  • ✅ Boosts Employee Engagement — Providing flexible salary packaging options helps improve workplace morale.

  • ✅ Streamlined Payroll Processing — Most novated lease providers offer comprehensive support, reducing the employer's administrative workload.

Tips to Secure Employer Approval for a Novated Lease

If your employer is hesitant or refuses initially, these steps can help:

1. Educate with Facts & Benefits

Present clear, simple information about novated leases and their advantages. Emphasise their cost-neutral nature and how the program can enhance employee satisfaction.

2. Offer Solutions for Admin Concerns

Reassure them by sharing details about novated lease providers who handle most paperwork, compliance, and communication.

3. Volunteer to Be the Liaison

Show willingness to be the point person between your employer and the novated lease provider, easing the administrative load.

4. Suggest a Group Lease Scheme

Encourage employer consideration of a group novated lease program if multiple employees express interest, often leading to better rates and simpler management.

5. Propose a Trial Period

Recommend a pilot program or a limited trial period to let the employer test the waters without long-term commitments.

Alternative Salary Packaging Options

If the employer still refuses to participate, consider other salary packaging benefits such as:

  • Portable laptops and mobile phones

  • Additional superannuation contributions

  • Work-related expenses that qualify for salary packaging

These options can provide tax savings and additional financial benefits.

What Happens if You Change Jobs?

Novated leases are tied to your employment. If you change jobs, you’ll need to novate the lease to your new employer or take responsibility for the payments yourself. Make sure your new employer supports novated leasing.

Why Choose Novated Finance Australia?

We understand that negotiating novated leases can be tricky. At Novated Finance Australia, we specialise in making the process easier for employees and employers alike. Our expert team can help you navigate employer concerns, provide the right information, and connect you with trusted novated lease providers. If you want to explore your options or need advice on how to approach your employer, contact us today!

Understanding employer rights and being proactive in communication can increase your chances of getting a novated lease approval. Don’t miss out on this fantastic salary packaging benefit. Start the conversation today!

FAQs

  • Yes. Employers are not legally obligated to offer novated leases and can decline based on their business policies or resources.

  • Common reasons include administrative burden, company policy, existing salary packaging arrangements, or cost concerns related to payroll management.

  • Try educating them about benefits, suggest group schemes, offer to coordinate with providers, or explore other salary packaging options.

  • No. Lease payments come from your pre-tax salary via payroll deductions, so the employer does not bear the cost directly.

  • You must novate the lease to your new employer or take over payments yourself. Always confirm with your new employer if they support novated leases.

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