Employers need a robust strategy to manage employee-owned vehicles used for business journeys, known as grey fleet, so here are some top tips to help.
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- Employers thinking about grey fleet need to consider the implications of breaching the Corporate Manslaughter and Corporate Homicide Act 2007.
- All organisations running company car schemes require a clear grey fleet policy.
- Employers can help to reduce their grey fleet risk by removing financial incentives, such as mileage reimbursement, which may incentivise employees to make unnecessary business trips by car.
1. Know the risks
John Yarroll, chief executive officer at fleet management provider FleetEurope, says: “A key consideration is for employers to actually think about the issue. They have started to do so because of the risks arising from corporate manslaughter [legislation], but as far as we are aware, many employers are not even conducting regular driving licence checks.”
Under the Corporate Manslaughter and Corporate Homicide Act 2007, which came into force in April 2008, employers can be found guilty of corporate manslaughter as a result of serious management failures that result in a gross breach of a duty of care, which can relate to company cars.
Yarroll attributes employers’ grey fleet neglect to the fact that there has not yet been a test case with claims arising for compensation as a result of a work-related driving accident.
John Pryor, chairman of the Association of Car Fleet Operators (ACFO) and group fleet and travel manager at Arcadia, advises employers to consider which employees have permission to drive in a business capacity. “If an employee has an accident and somebody is killed, there could be questions asked about who has given the permission, what the employer’s policy is and what procedures are in place, as well as whether there is insurance on their car, whether the car is fit for purpose and who owns the vehicle,” he says.
2. Create a policy
Employers need to have a clear policy on grey fleet in place. ACFO’s Pryor says: “It should fit into HR as a policy because employees need to sign it and abide by it, but employers need to consider how it is policed.”
Policies must clearly state who is responsible for checking that employees comply with the organisation’s policy, as well as what is expected of staff drivers and how they will be reimbursed for business mileage.
The policy should also require checks that assess, for example, whether employees are licensed to drive and whether their cars are fit for purpose.
But Andrew Leech, managing director at salary sacrifice car scheme provider Fleet Evolution, says: “For a lot of employers, their starting point is how they can manage their risk, whereas we think it should be about how they can reduce their risk.”
3. Identify a tracking mechanism
Employers must identify a means by which they can track employees’ business miles, which will help them to assess their potential company car risk.
Mike Palmer, operations director at car rental provider Nexus, says: “The simplest way is for employers to record the mileage through employees’ expense returns, which will help them analyse who is putting expense claims in for business mileage.”
Palmer says employers should track employees’ business mileage irrespective of how labour intensive the duty may prove.
As part of their analysis, employers should consider the suitability of employees’ cars for business usage, because older models may no longer be fuel efficient or environmentally friendly.
4. Remove driving incentives
One of the easiest ways for employers to reduce their grey fleet risk is by removing incentives for employees to drive for business.
Fleet Evolution’s Leech says: “Most employees who own their own car will know that [the approved mileage allowance payment rate of] 45p per mile is a very healthy reimbursement rate, so there are quite a lot of journeys that may be made just because staff see an incentive to make them, rather than considering alternative means.”
Staff should be encouraged to consider using alternatives, such as hire cars, public transport, car pooling schemes and salary sacrifice cars, which typically offer a smaller reimbursement mileage rate.
5. Communicate with employees
Employers should consider using intranet sites, email campaigns and training courses to explain grey fleet to employees.
But FleetEurope’s Yarroll says: “Grey fleet is a grey area and there is often not a great deal employers can do to raise awareness about what a business mile is.”
Nevertheless, employers need to be able to show that they have taken all sensible precautions to prevent anything going wrong.