Guide to ‘Grey Fleet’ – Out of sight, out of mind?
Do you have drivers using their own car or van for your business?
Business needs transport to function. Delivery drops, bank runs, client visits – you name it, business needs it. Without vehicles and transport businesses simply cannot function. How to facilitate these journeys? The most simple way of course is to provide a company vehicle. You are in control of the asset, the cost, the maintenance – it seems like the most logical solution and indeed it works almost across the board.
But perhaps your one of the many businesses that allows employees to use their own vehicles to drive for work?
Why would businesses let employees use their own car? Its cheaper? You don’t have all the admin. The driver can source, fund and maintain it themselves. No insurance to sort, no accidents to deal with. Much easier and cleaner than a company vehicle right? Erm, no. Well not really.
‘Grey fleet’ is simply the term used to describe any vehicles that do not belong to the company, but which are used for business travel. This might include a vehicle purchased via an employee ownership scheme, a privately rented vehicle or a vehicle privately owned by an employee. When they are driven on company business, often in return for a cash allowance or fuel expense, these vehicles then become considered part of the ‘grey fleet’ – and as such fall under the responsibility of the employer.
A company whose employees drive their own cars for business reasons should have a comprehensive programme in place to look after all aspects of safety for their drivers. The aim should be to ensure drivers are legal and compliant and to minimise the risk of their drivers being involved in a collision when they are behind the wheel.
National data from the UK shows that:
- Approximately 14 million Grey Fleet vehicles are in use
- 9 million vehicles are used for business journeys on regular basis
- 40% of work vehicles are Grey Fleet
- 62% of private car use is for work related activity
- 12 billion miles are driven each year by Grey Fleet drivers
Management of fleet safety is already a challenging issue for fleet managers and safety professionals when the vehicles are owned or leased by a company. Add Grey Fleet vehicles to the mix, the task becomes even more complex. Research has shown that many companies are oblivious to the scale of costs, the environmental impact and the legal risks that are associated with Grey Fleet.
What is a “business journey”?
Simply – a journey in a vehicle that would not have otherwise taken place if not at the behest of the business. That can be an occasional trip to the bank, a training event, a client. Any place that isnt considered that person main place of work is classed as a permanent place of work is a business journey.
The RISKS involved…
As these grey fleet vehicles do not belong to the company, fleet managers face a complicated set of issues when it comes to managing the safety of their fleet. For one thing, employees using their own car may be outside of the established insurance and servicing policies, meaning their vehicles are not covered for company travel.
Another issue is attempting to keep track of the status of grey fleet vehicles to ensure they meet legal road requirements, including:
- Driving license validity
- Insurance details including business use
- MOT certification
- Road Tax validity
The Health and Safety at Work etc Act 1974 requires employers to ensure, so far as is reasonably practicable, the health and safety of all employees while at work. Employers and employees also have a responsibility to ensure that others are not put at risk during any work-related driving activities. This means you have the same legal duty of care for grey fleet drivers as you would for those in a work supplied vehicle.
Duty of care
Over the last few years, the amount of legislation that surrounds fleet risk operations has grown substantially. These legislation’s range from the Health and Safety at Work and the Corporate Manslaughter and Corporate Homicide Act.When it comes to the duty of care that surrounds these legislation’s, it’s no longer enough to ensure that drivers have a valid MOT and driving licence. Fleet managers now need to introduce set specific procedures in place, including:
- Monitoring Driver behaviour
- Manage total driving hours
- Risk management policies
- Ensure vehicle checks are being carried out regularly
- Licences, driver management and training
We have been working with a client recently who has a large 400+ grey fleet – all using their own vehicles for business trips and sometimes even carrying passengers. A few years ago they, well – the MD, was actually prosecuted for permitting a journey of a grey fleet driver, carrying a passenger, who didn’t have a licence. The business wasn’t aware this was their responsibility to make sure that the driver was licenced and competent. Unfortunately neither did they know that the vehicle had 3 bald tyres and wasn’t insured either. Remember, even though its their vehicle they are your driver conducting your journey.
What to consider before letting drivers use their own car?
Even if there is a driving at work policy in place, there are certain factors that need to be considered before employees are allowed to drive for work purposes, such as
- Vehicles should be fit for purpose, road legal and suitable to the task required
- Vehicles should be maintained and serviced to the highest possible standards
- Drivers should be sufficiently healthy and safe to drive
- Drivers should be given all possible information to reduce risk
Where possible, the fleet manager and the business should compile a fleet policy, this will help to communicate the policy in a formal manner. To comply with health and safety legislation and the HSE’s Driving at Work guidance, any grey fleet policy should include statements relating to the vehicle, the driver and the journey. Drivers could be asked to sign this declaration as it provides evidence that the drivers have been made aware of their responsibilities.
A key challenge when implementing a grey fleet policy is to ensure all employees and managers are aware of their responsibilities in relation to using grey fleet vehicles.This communication means that both employees and management are able to understand their responsibilities and learn how to meet them in the most efficient way. For employees, this includes responsibility for safe and legal driving, ensuring their vehicles are fit for purpose, and journey planning, including selecting the most sustainable form of transport. For line managers, this includes challenging the travel choices of employees and making sure safety standards are maintained
What vehicle would you like them to drive when representing the business? Is a 1972 E type Jaguar OK? How about a pink Subaru Impreza or a brand new convertible Smart car? Maybe a Mercedes Sport Estate is a bit flash for your sales execs to visit clients in? You need to consider this when you give a cash allowance or permit use of a private vehicle. How does the vehicle reflect on the business and also, from a compliance point of view, is it fit for purpose and suitable for the usage? Consider a grey fleet application process and have a rule set before you allow a vehicle on to your fleet.
Minimise unnecessary travel
A ‘travel hierarchy’ sets out a decision making framework to minimise travel and its impact. It is recommended that employees should avoid unnecessary travel and, instead, consider other modes of transport other than driving, such as public transport, walking or cycling. Staff should follow the framework to help them make the right travel/transport choice to help reduce cost and environmental impact. A travel plan is about encouraging people to use cars more wisely and offering them better alternatives. Travel plans should also encourage safe and fuel efficient modes of transport. Less travelling means lower fuel costs, lower fleet risks and fewer operational costs.
This is a potential banana skin for many businesses and can become somewhat of a stealth cost if you don’t keep an eye on it. I’ll give you an example from one of our own clients. Company X hired a company trainer and gave them permission to use their own vehicle and claim business mileage expenses. The rate of reimbursement was, as per the AMAP rates – at 45 pence per miles for the first 10,000 miles and 25ppm thereafter.
In a 12 months period the driver drove over 18000 business miles. Their total reimbursement for the year was £6500! A strong argument for a company vehicle perhaps? (Councils and education authorities suffer this greatly).
TIP – It might be easier and cheaper to give the grey fleet driver a company fuel card and you charge them for personal miles rather than reimbursing for business… Or maybe a company vehicle too? But either way be sure your journey logs are accurate.
Its important for HMRC, vat reclaim, purposes that you know which are business and personal miles of course but also how can you be sure that your drivers are being honest with you? You can use paper records sure but its generally accepted that businesses pay out more than 15-20% than actual driven miles which can really add up. Consider an GPS or telematics device to ensure not only accuracy but reduced admin for your drivers too.
It is possible to operate a low risk, cost controlled cash allowance scheme but be sure to consult with professionals before you implement. Some funders will also consider vehicle salary sacrifice schemes that work much the same way as the well known Bike 2 Work program. But the thing to know is that there are clever ways to give cash allowances but also remaining in control of all the pitfalls mentioned above but it needs to be well thought out, usage driven and strongly considered and can never be as simple as throwing £400 a month at a driver and just letting it happen. Id always lean towards a company vehicle but if there’s a business case to offer cash then so be it.
THE GREY FLEET CHALLENGE!!!
If you have drivers that drive their own vehicles for your business and you aren’t 100% sure that those vehicles are MOT or TAXED then this is for you.
Visit keys.keyfleet.co.uk , create a free account, and add your grey fleet vehicle registration numbers for FREE and the system will tell you 100%.
PS – You should also check other things such as insurance for business use and tyres etc but this will be a great place to start!
Best of luck!
Reduce costs, reduce risks, reduce admin.