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Salary Sacrifice Early Termination

Explore everything you need to know about salary sacrifice and early termination including scenarios as well as early termination protection.

Whats Included with Early Termination Protection?

SalSac offers a range of Early Termination Protection Plans designed for different company sizes and different risk appetites. These policies protect employers and employees from the financial risk of terminating a salary sacrifice lease before the contract end date.


As with all other elements of our salary sacrifice scheme our early termination protection can be tailored to suit your business requirements. Please note that not all protection plans are available with all funders.

Early Termination Protection Generally Covers (terms & conditions apply)

Early Termination Protection
Parental Leave
Reduced Contracted Hours
Loss of Licence
Long Term Sickness
Career Break

What is Early Termination

Early termination in the context of car leasing refers to the act of concluding or discontinuing a lease agreement for a vehicle before the originally agreed-upon contract duration has been fulfilled. In traditional car leasing, lessees commit to a specific period, often expressed in months, during which they are responsible for making monthly lease payments and adhering to the terms and conditions outlined in the lease contract.

Early termination deviates from this contract by allowing the lessee to terminate the lease earlier than anticipated.


While this option provides flexibility for lessees who encounter unforeseen circumstances or changes in their needs, it typically involves certain conditions, fees, and consequences, which may vary based on the leasing company or funder and the terms of the specific lease agreement. These conditions and penalties are designed to offset the costs incurred by the lessor due to the premature termination of the lease.

Common Employee Scenarios 

Early termination of a car lease salary sacrifice can arise due to various scenarios and changes in circumstances that impact an employee's ability to fulfil the lease agreement. Some common scenarios include:

  1. Job Changes: If an employee experiences a job change, such as a new job in a different location or job loss they might need to terminate the lease early to accommodate their new employment situation.

  2. Financial Constraints: Changes in financial circumstances, such as unexpected expenses, reduced income, or increased financial responsibilities, may make it challenging for a lessee to continue making lease payments. Early termination could be considered to alleviate financial strain.

  3. Lifestyle Changes: Significant life events like marriage, divorce, starting a family, or retirement might necessitate a different type of vehicle or a change in transportation needs. In such cases, an employee might opt for early termination to switch to a more suitable vehicle or mode of transportation.

  4. Health Issues: In the event of health problems, an employee might be unable to drive or might need to adapt their vehicle to accommodate medical needs. This could lead to early termination if the current leased vehicle is no longer appropriate.

  5. Relocation: Relocating to a new city or country, especially in cases where the leased vehicle isn't feasible or cost-effective in the new location, could prompt the need for early termination.

It's important to note that while early termination can provide flexibility in these scenarios, it often comes with associated costs, penalties, and considerations that employees and employers should carefully evaluate before making a decision. Reviewing the terms and conditions of the lease agreement and discussing options with the leasing company and the salary sacrifice provider is recommended before proceeding with early termination.

Early Termination Protection

Early Termination Protection for a Salary Sacrifice Car Schemes refers to a provision or benefit that aims to provide financial protection to employees and employers who participate in a car leasing arrangement through a salary sacrifice program.


This protection is specifically designed to address the potential financial impact that could arise if the employee needs to terminate the car lease earlier than originally planned due to unforeseen circumstances.

The key features of Early Termination Protection might include:

  1. Financial Coverage: If an employee needs to terminate the car lease early due to qualifying events, the Early Termination Protection would cover a portion of the financial liabilities associated with early termination. This could include penalties, fees, and costs that would otherwise be borne by the employee.

  2. Qualifying Events: Common qualifying events might include redundancy, job loss, serious illness, or other significant life changes. The protection would typically apply if the employee experiences these events and can no longer continue with the car lease.

  3. Limited Coverage: Early Termination Protection might cover only a percentage of the total costs associated with early termination. The exact coverage amount and terms would be outlined in the protection plan.

  4. Exclusions: Some scenarios might be excluded from coverage, and it's important for employees and employers to understand the specific terms and conditions of the protection plan to determine which events are eligible for coverage.

  5. Claim Process: The process for making a claim under Early Termination Protection should be clearly defined. Employees may need to provide documentation of the qualifying event and follow the specified procedures to initiate the claim. However, some plans do not require any reasons or qualifications to submit.

  6. Cooperation with Leasing Company: Employees may need to work closely with the leasing company and their employer's benefits provider to navigate the process of early termination and claim submission.

Early Termination Protection for Salary Sacrifice Car Schemes provides peace of mind to employees and employers who are considering participating in such schemes, knowing that they have a level of financial security in case unforeseen circumstances require them to end the lease prematurely. It's essential for employees to carefully review the terms of the protection plan, including the events covered, coverage limits, and claim procedures, to make informed decisions about participating in the Salary Sacrifice Car Scheme.

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