Man with helmet on Gazelle company bike in front of modern building

Collective agreement: Company bikes allowed in the public sector

15 December 2020

Collective agreement 2020: Breakthrough for company bike leasing in collective agreements

Good news for almost 1.9 million municipal employees in the public sector! The trade unions for the public services of the Federation and municipalities have achieved gratifying results in the 2020 round of collective bargaining: In addition to up to 4.5 per cent more pay, leased bicycles will be allowed in municipal collective agreements in future. Company bike leasing in the public sector represents a breakthrough for modern, sustainable and climate-friendly mobility – and a beautiful expression of appreciation towards the performance of employees. You can find all information about the company bicycle leasing agreement in the collective agreement here:

Company bicycle leasing in the collective agreement: What was the problem?

A large number of public service employees have long desired the option of leasing a company bicycle. After all, e-bicycle leasing via the employer is a reality in many companies - and a concept that has proven its worth. It also offers numerous benefits on both sides - including a positive image for the employer and better health for the employee. What was the problem? 

It’s quite simple: Company bike leasing is a deferred compensation model. However, many collective agreements do not provide for salary conversion. There is a reason for that: In the past, employers often tried to pay their employees in kind to save money. In order to protect workers, this possibility is often not provided for in collective agreements or is even explicitly excluded. In principle a sensible measure – but in the specific case of company bike leasing, unfortunately to the disadvantage of the employees. 

That is why, as part of the 2020 collective bargaining in the public service for federal and local governments, the unions also called for the opening of the contracts with the option of company bicycle leasing in September – with success!

Company bicycle leasing after collective agreement: What has changed?

Even before the agreement was reached in the 2020 collective bargaining round, some collective agreements allowed for deferred compensation for company bicycles. For example, doctors from municipal hospitals or employees of the German Cooperative and Raiffeisen Association could lease e-bicycles through their employer. Baden-Württemberg recently became the first German state to allow company bicycle leasing for state civil servants. 

The results of the 2020 bargaining round were announced in October: 

As of next year, company bicycle leasing will be included in the collective agreements of the municipalities. The Bundesverband Zukunft Fahrrad e.V. (BVZF) welcomed this measure. Wasilis von Rauch, Managing Director of BVZF, commented: “The agreement for a company bicycle is a milestone for sustainable corporate mobility. We are very pleased that ver.di and the Vereinigung der kommunalen Arbeitgeberverbände [Federation of Local Government Employers' Associations] (VKA) have gone for it." He expressed optimism for the future: “We hope that this agreement will set a precedent and that an increasing number of collective agreements in the public sector and other areas will allow leasing by deferred compensation in the future.”

What does the new company bicycle leasing regulation in the public sector mean?

The new company bike leasing regulation in the public sector means that municipal collective agreements no longer stand in the way of company bicycle leasing as a salary conversion model. This was specifically formulated in the collective bargaining agreement under point 5a: “Components of the remuneration can be converted into individual contracts for the purpose of leasing bicycles within the meaning of Section 63a StVZO [German traffic regulations].” In this way, the contracts are opened for salary conversion for the purpose of company bicycle leasing. Other forms of salary conversion are still not provided for – so employees' rights can continue to be protected without public service employees having to give up a modern leasing bike.

How does company bike leasing work after the 2020 collective agreement in the public sector?

Company bike leasing in the public sector works in a similar way as in companies. Municipal employers lease modern bicycles or e-bicycles for their employees from a leasing bicycle provider such as Lease a Bike. These leased bicycles are made available to employees as company bicycles. The moderate monthly leasing instalment is deducted from the gross salary as deferred compensation.

In this way, employees can save taxes, since the basis for calculating their income tax and social security contributions is reduced. Thanks to the one per cent regulation, employees can use the company bike privately without restriction. Since 2020, only 0.25 percent of the new list price (instead of the previous one percent) must be taxed monthly as a non-cash benefit.

Find out now about company bicycle leasing at Lease a Bike – we will advise you free of charge and without obligation! Contact us now.