Consumer Rights Bill could affect flexible benefit and salary sacrifice schemes

11 June 2014

Employee Benefits advise that the Consumer Rights Bill could impact the provision offlexible benefit schemes and salary sacrifice arrangements..

We are grateful to Employee Benefits for this analysis:

The bill, which takes effect from 13 June, sets out a modern framework of consumer rights, which will include:

· A right to get what you pay for.

· A right that goods and digital content are fit for purpose and services are provided with reasonable care and skill.

· A right to have faults in what you buy put right free of charge, or to be provided with a refund or replacement.

These consumer rights will also apply to employees in relation to the benefits provided to them in the workplace.

An employer that offers employee benefits to staff will now effectively become a supplier of goods and services to employees who pay for the benefits via a salary sacrifice arrangement..

Organisations will have to provide the same rights under the bill to their employees, such as offering a cooling-off period of between 14 to 30 days during which an employee can cancel a benefit they have selected

Employers will also need to make sure the terms and conditions of the benefits contracts are compliant with the legislation in order to avoid any legal action against them.

Martha How, principal at Aon Hewitt, said: “The Consumer Rights Bill will change the relationship between employers and staff.

“There is no doubt when looking at the bill that employees come under the definition of consumers and employers come under the definition of traders or intermediaries to traders.

“The consumer rights apply to employees when employers give them the chance to buy a benefit via flex or salary sacrifice.

“Employees will now have the same rights as consumers when they buy something, for example, on Amazon. They will have the right to cancel the benefit.”