Our survey was carried out in January 2007. We received 309 replies from Employee Benefits readers and users of www.employeebenefits.co.uk
Who are the respondents?
51% manage their fleet in-house.
31% say cars will always be part of the perks package and 30% believe they are an essential recruitment tool.
Employees who drive on business are a health and safety concern to 82%.
14% of employers would examine their health and safety/duty of care requirements if they reviewed their company fleet.
78% offer a cash allowance as an alternative to company cars.
71% offer cash allowances to give staff more choice and 47% say they use the strategy to reduce fleet size.
3% of employers introduced liquefied petroleum gas (LPG) cars or other green-fuelled cars in the last year, while 8% restricted choice to low CO2-emitting vehicles.
Contract hire is the favoured sourcing method for 51% of employers, while 20% prefer outright purchase.
52% of employers do not offer an all-employee car ownership (Aecop) scheme and would never consider it.
Diesel cars are offered by 65% of organisations, whereas LPG cars are offered by 7%.
83% have a policy on drink/drug driving, but only 38% have one on in-car smoking.
While satellite navigation and other forms of in-car telematic systems that reduce fuel wastage have been a hit with employers, interest in other green measures, such as LPG cars, appears to be waning, says Nick Golding
This year’s fleet research shows that in-car technology has pushed its way onto the company car agenda. Telematics systems, such as a satellite navigation devices, were introduced by 10% of employers in the past twelve months, which is perhaps not surprising since this technology can help save fuel and cut journey times by mapping out the quickest route.
Although fleet experts expect further tax incentives for environmentally-friendly vehicles to be introduced in the 2007 Budget, interest in adopting a green agenda is not particularly high. Just 3% of employers introduced LPG or other green-fuelled company cars over the last 12 months, down from 6% in last year’ survey. However, 7% of respondents intend to introduce LPG or other ‘green’ cars in the next 12 months. The move towards other green policies also appears to be waning. While 8% of respondents introduced a restriction on driver choice to low CO2-emitting cars in 2006, 11% did so in last year’s survey.
Introducing a health and safety policy has been the priority for employers over the last 12 months, with 18% of respondents taking this course of action. Going forward, a quarter (15%) of respondents intend to introduce one.
Having a company-funded car that is not necessarily for business travel is a real perk, therefore such a benefit is typically only offered to a minority of employees.
In fact, almost a third (31%) of those that offer a cash allowance noted that below 10% of their fleet are perk drivers, demonstrating that it is a prestigious benefit.
Smaller organisations are less likely to offer cars to employees who do not need them for business. This year’s fleet research has found that 53% of employers with fewer than 100 employees offer cars purely as a perk to 10% or less of their drivers.
Employers reviewing their company fleet are more interested in cost savings than more altruistic aims like reducing carbon emissions, according to this year’s survey. In fact, 31% of respondents say they would be interested in achieving the maximum possible savings, compared with only 7% who said reducing CO2 emissions would be the most important task if reviewing their company fleet. The least pressing concern is ensuring there are no benefit-in-kind issues for employees. This was cited as the most important issue by only 4% of respondents.
Although the company car clearly remains a popular way to attract new talent according to 30% of respondents, not all organisations adopt this perspective. In fact, 17% of this year’s respondents view company cars as an outdated benefit – a figure that has seen little change over the past two years. In our 2005 research, 15% of respondents said they thought the company car was an outdated perk, as did 18% in last year’s survey.
Over the last few years, employers have gradually become more aware of the impact of their fleet on the environment, even if they are doing little to negate this. Nevertheless, only 8% of respondents this year recognise that their fleet negatively impacts on the environment, the same as in last year’s survey, but more than the 2% in 2005.
Faith in company car schemes remains steady. In our 2005 survey, 35% of employers felt that cars would always be part of their long-term benefits plan, while 31% said the same this year.
There is a reasonably even split between organisations willing to take on the administration of a company car scheme themselves (51%) and those that call upon a fleet management provider (44%).
The decision whether to outsource is likely to come down to the size of the fleet and the resources available to the department managing the car scheme. This is echoed in the survey, with the majority (67%) of respondents with between 5,001 and 10,000 employees opting to hand over fleet management to a third party, while of those with less than 100 employees, 63% of respondents manage their company car scheme from within their organisation.
Cash allowances remain popular among employers as they strive to rid company cars from their balance sheets, but in doing so they open themselves to potentially onerous duty-of-care obligations, says Vicki Taylor
Cash allowances remain a popular option with employers. More than three-quarters (78%) offer a cash allowance this year, which is a slight increase on last year’s 77%.
Such a scheme removes company cars from the balance sheet but can also leave organisations open to duty-of-care claims if employees use the cash to purchase an unsafe car, or one which is not fit for its intended purpose.
The number of respondents looking to get rid of company cars altogether has increased sharply over the past year. More than a quarter (29%) now offer a cash allowance in order to get rid of company cars, which is up from 17% last year. Just under half (47%) are also looking to trim the number of cars in their fleet, which represents a rise of 15% over the past 12 months. Providing staff with a greater choice remains respondents’ top reason for offering a cash allowance. However, the proportion offering a cash allowance for this reason has fallen slightly from last year – down from 78% to this year’s 71%.
There has been little shift in the organisational structure of cash allowances over the past year. The number of respondents that offer the perk to all drivers has remained steady at 35%.
What is perhaps surprising is the increase in the proportion of respondents offering cash allowances to business users, up from last year’s 18% to 25%. Not only are there health and safety implications as organisations have less control over the quality of cars that staff purchase, but employees are not entitled to the same bulk discounts available to organisations. On the plus side, however, outsourcing a fleet to a cash allowance provider can remove the administration burden for employers.
The drop in the number of respondents that limit cash allowances to status or perk drivers from 45% in 2006, to 39% this year, could be due to employers’ desire to reduce the size of their fleet.
It is significant that the proportion of employers experiencing take up of cash allowances of between zero and 5% has fallen from 21% last year to 9% in this year’s survey. This positive trend is also reflected in the rise in respondents recording take up of between 26-50% from 22% last year to 30%.
The number of respondents which provide access to an all-employee car ownership plan (Aecop) has remained steady since last year’s survey. While 14% offered access to a scheme in 2006, 13% now do so. This suggests that the 34% of employers that said they would consider offering such a scheme in the future in last year’s survey have not yet gone ahead.
Contract hire remains by far the most popular way for employers to source company cars, with 51% citing this as a procurement method. However, 29% now say cars are sourced by employees through a cash allowance, compared with 21% last year. In addition, only 20% say they opt for an outright purchase, which was favoured by 28% in 2006.
When it comes to the reasons behind their choices, 60% of respondents claim their favoured method is the most cost-effective way of sourcing cars, suggesting that money is saved by spreading the cost through contract hire or by offering employees a cash allowance rather than buying vehicles outright. More than two-thirds (67%), meanwhile, say they prefer to opt for a method that is simple to manage.
A further 21% wish to keep cars off the balance sheet, while 16% use their chosen funding method to maintain control of health and safety issues.
Diesel cars remain a popular choice, offered by 65% of respondents. These cars are generally cheaper to run than petrol models making them more economic for use during non-working hours. This is likely to be welcomed by employees, particularly as only 35% of respondents now provide free fuel for employees’ private use, compared with 43% in 2006.
Surprisingly, the number of organisations which provide ‘green fuel’ vehicles and liquefied petroleum gas cars has fallen from 17% to 13% and 15% to 7% respectively since 2006, despite the general move in the UK towards protecting the environment.
This could be due to the limited availability of forecourt facilities to enable such cars to be refuelled and recharged
Employees driving on business continue to be a key health and safety issue for employers, but pre-emptive action such as driver training remains off radar for many, particularly if staff use their own cars for work, says Vicki Taylor “
Workplace safety remains high on employers’ list of priorities. The proportion of organisations that place staff driving on business at the top of their health and safety agenda has remained fairly static over the past 12 months and now stands at 82%.
With the corporate manslaughter and homicide bill currently going through the House of Lords, the issue of fleet safety may well become a much greater concern for employers this year. The legislation is expected to introduce penalties for management if an employee dies due to shortcomings in an organisation’s health and safety process.
Ensuring staff have a sound knowledge of driving techniques can go a long way towards keeping them safe on the road. Yet, despite evidence that driver training can help to cut accident rates, less than half of respondents provide this for staff. Oce, a digital printing company, for example, saw its accident rate fall from 69% to 39% over five years after introducing in-car driver training.
Some 37% of respondents provide advice on what to do in the event of an accident, while 34% offer help with journey planning and 27% provide information on things like tyre pressures. The figures are also worrying where employees use their own cars for work, perhaps because employers assume staff have sufficient knowledge of their own vehicles. In fact, 72% do not provide driver training for this group, while only 16% offer them advice about what to do in the event of an accident.
A high proportion of respondents (87%) allow employees who are not eligible for a company car to drive their own vehicles on business. While this has its advantages, keeping costs low for employers, there are also potential risks involved. There is no guarantee, for example, that employees will keep their own cars well maintained. Although it is difficult for employers to track maintenance, they can be held responsible for any health and safety failures leading to death or injury.
These risks could be set to increase later this year when the corporate manslaughter and homicide bill is expected to come into effect. Under its terms, managers could be held personally liable in the event of an employee’s death stemming from health and safety failures.
It could be for this reason that the majority of employers check items such as car insurance (78%) and driving licences (76%) when staff use their own cars for work-related travel. However, a similar number of respondents check insurance (80%) and driving licences (73%) where organisations manage their own fleets.
The number of respondents that check whether employees’ own cars have been serviced and have a valid MOT if they are used for work-related purposes has also increased — in the past year, this has risen from 32% to 41%.
With corporate manslaughter legislation currently going through Parliament, workplace safety remains a key issue for employers.
For the third year running, a formal mobile phone policy tops the list of employers’ health and safety measures, with 87% of respondents now having such a policy in place. This still leaves 13% of organisations, however, that have not yet responded to the 2003 ban on using a hand-held phone while driving by putting a policy in place for staff, although 5% say that they intend to introduce one.
The smoking ban due to take effect in July appears to have had little impact as yet. Just over a third (38%) operate an in-car smoking policy, while 16% plan to introduce one. These figures may change once the ban takes effect. Under the draft regulations, the ban will apply to cars used purely for business and those used by more than one person.
A number of employers are also looking to assessments to help fulfil safety requirements. A fifth of respondents are planning to introduce driver assessments before staff are given a company car, although just 9% currently use these. A further 21% plan to introduce risk assessments for work-related car use.
Almost two-thirds (61%) of respondents plan work schedules around business trips to ensure that employees have sufficient time to complete journeys. This is an improvement on last year’s figures when 55% planned schedules around business trips.
Just under three-quarters (74%) consider that it is a priority to build sufficient time into employees’ timetables to enable them to complete journeys safely, while 76% offer alternatives to driving such as travelling by train. Only 38% of respondents put checks in place to ensure drivers are not put at risk by fatigue, even though falling asleep at the wheel is a well-known cause of driving accidents.
This article is brought to you by Masterlease.
As one of the UK’s leading fleet management firms, Masterlease has over 40 years’ experience in all aspects of fleet acquisition, funding, management and disposal, but being able to find out first hand what is driving fleet decisions is always invaluable.
The real importance of research like this is that it gets to the heart of many of the issues that are widely debated in the media such as health and safety and the environment, by finding out how employers are dealing with these issues in reality. However, these findings do reveal a lack of awareness of the potential cost savings that can be achieved by acting on some of these issues.
The research has thrown up some interesting results and highlighted some areas where employers may need to take action.
For example, despite business car drivers representing a health and safety concern to 82% of respondents, a huge 78% of them still offer a cash alternative to company cars.
The potential dangers of allowing employees to use their own cars for business have been well reported, yet it seems there are many companies who are still actively encouraging this through ‘cash for car’ schemes. If an accident should happen involving a car that is, for whatever reason, not in a fit state to be driven, then the employer in question could be held liable.
Masterlease strongly believes that employers should not offer cash for car for business-use drivers unless they have a structured scheme in place that includes a rigorous process to examine the suitability, legality and roadworthiness of the vehicles selected, along with the qualification of the drivers, including licence and business insurance checks.
Considering that the smoking ban will come into force on 1 July, another area for attention is the apparent lack of in-car smoking policies among the majority of employers, with currently only 38% having such documentation in place. Last year Scotland enforced a smoking ban in all commercial vehicles, but in England this ban will be extended to include all cars used for business.
The draft legislation has now been published so employers have no excuses not to review their policies and should do so as a matter of urgency.
And perhaps most surprising is the apparent lack of interest in introducing green policies or reducing the CO2 emissions of a fleet given the recent focus in government and the media. While 31% of respondents said they would be looking to make maximum cost savings, the significant cost reduction opportunities that can be found by choosing a lower CO2-emitting fleet seem to have been ignored.
The fact is that employers soon may have no choice but to address the problem, but they can benefit now by helping drivers to make informed choices about their vehicles, offering greener vehicles as alternatives and even incentivising the selection of less-polluting cars.
Masterlease remains committed to working to provide solutions to the ever-changing needs of its customers and would be delighted to discuss any of the issues raised in the research in more detail.
The views and opinions in this article are those of our sponsor, Masterlease, and do not necessarily reflect those of www.employeebenefits.co.uk.