Govt. & Public Sector: Cut the cost of your commute
How to cut the cost of the commute with pre-tax bikes and public transport benefits
Short answer: In New Zealand, employers can offer public transport and bikes as benefits through salary sacrifice. Employees pay from their pre-tax income, so a typical $80,000 earner spending $50 a week on public transport saves over $900 a year. With Workride, employees save an average of 30 to 35% on a bike, e-bike, or scooter.
In our latest webinar, Workride and Extraordinary were joined by ACC New Zealand and Greater Wellington Regional Council. They shared how public sector organisations are bringing these benefits to their people, what the rollout involves and what they learned along the way.
Speakers:
Aidan Smith, Co-founder, Workride
Steve Zinsli, CEO, Extraordinary
Grant Fletcher, Head of Regional Transport, Greater Wellington
Erin Aspros, Lead Advisor Sustainability and Climate Change, ACC New Zealand
Shiz Irani, Remuneration Lead, ACC New Zealand
What is the Workride bike to work benefit?
Workride is a salary sacrifice programme for bikes and e-bikes. Employees swap part of their pre-tax salary for a bike, which cuts the real cost of the bike. Workride secured New Zealand's first Inland Revenue approval via Binding Ruling for a pre-tax salary sacrifice programme and now works with more than 2,000 companies.
Workride Plus is the fully financed option for employers, and it's a strong fit for government organisations:
No benefit costs up front for employers, with the benefit instalments spread across 12 months
No financing exposure or cost for employers
Flexible terms and a friendly cancellation policy
Works at the vast majority of New Zealand bike shops
A fully digital process with a simple employer dashboard
How much can employees save on a bike benefit with Workride?
On average, Workride Plus employees save 30 to 35% on their bike or e-bike. For example, someone earning $85,000 who takes a $5,200 bike benefit sees their take-home pay drop by only about $3,200 over the year.
How did ACC launch a bike salary sacrifice scheme?
ACC used a staged approach to launch Workride Plus across roughly 4,500 staff at 24 sites.
Why ACC chose Workride Plus:
Strong demand in ACC's annual staff commute survey
Staff commuting is ACC's biggest emissions source and is included in its Carbon Neutral Government Programme (CNGP) targets
Rising fuel costs put more pressure on staff
How ACC made it happen:
Built a detailed business case with uptake scenarios (2 to 10% in year one), payroll capacity testing, affordability safeguards and a legal check against the Public Finance Act.
Formed a cross-functional working group covering procurement, finance, information security, architecture, legal, people and culture, and payroll.
Ran a proof of concept with two kaimahi, then a pilot with 20.
Set clear business rules: permanent employees only, commuter bikes and e-bikes only, and no e-scooters.
Launched organisation-wide on 1 October.
How much admin does a bike benefit create for payroll?
Much less than ACC expected. ACC estimated 23 minutes of payroll effort per contract, but the pilot came in well under that, and no extra payroll staff were needed. In one case, approval took two minutes and payroll setup took five minutes. The employee was riding home in under two days.
How does the Extraordinary public transport benefit work?
Employees reduce their gross salary by their weekly transport spend. That amount lands on their Extraordinary card each pay cycle, ready to tap on any bus, train or ferry in New Zealand, including AT, Snapper, Metlink and Bee Card networks.
The process for employers takes four steps:
Announce the benefit to your organisation.
Extraordinary handles sign-ups by emailing employees to ask how much they'd like to contribute each pay.
Payroll is set up, with contribution details sent to your team or straight into your payroll platform.
Funds flow automatically each pay run, and you get usage data to track uptake and savings.
How much can employees save on public transport with Extraordinary?
An employee earning $80,000 a year who spends $50 a week on public transport saves around $18 a week by paying with pre-tax income. That's over $900 a year back in their pocket.
Why does public transport matter to Greater Wellington?
Grant Fletcher explained that the Wellington Regional Land Transport Plan aims for a 40% increase in mode share for public transport and active modes. Getting more people onto buses, trains and bikes helps cut transport emissions and reduce deaths and serious injuries on the road.
Key figures Grant shared:
Public transport mode share in the region is now around 30%
Bus patronage in the Wellington region is still growing
Rail patronage is up across the country
The AA estimates commuting by car costs $8,000 to $10,000 a year
Ready to help your team save on their commute?
Ready to make a difference for your team? Contact Workride today and discover how you can elevate your employee offering.
Frequently asked questions
Can I salary sacrifice a bike in New Zealand?
Yes. Bikes, e-bikes, and scooters can be offered through salary sacrifice. Workride runs an Inland Revenue approved programme that saves employees an average of 30 to 35% with Workride Plus.
Is public transport tax-free in New Zealand?
Yes. Public transport is exempt from fringe benefit tax in New Zealand. With Extraordinary, employees can pay for public transport from their pre-tax salary under an Inland Revenue binding ruling.
Can public sector organisations offer these benefits?
Yes. Greater Wellington offers tax-free public transport through Extraordinary, and ACC offers Workride. The Workride Plus offering is designed to comply with public sector requirements, with no financing exposure for employers.
Can employees leave the public transport scheme?
Contributions are calculated over 12 months, but each employer sets its own policy on whether employees can leave the scheme and how often.
Can fixed-term or casual employees join?
It depends on your internal policy. Salary sacrifice works best for permanent employees with a steady salary. Many organisations limit bike benefits to employees on contracts of 12 months or more.
What happens when the binding ruling expires?
Both Extraordinary and Workride will renew their rulings. As long as the law stays the same, the outcome is expected to stay the same too. This isn't tax advice.
