How to manage a ‘grey fleet’ if you don’t have company cars
Letting your employees drive their own cars for work might seem an easy option, but you could be prosecuted if you don’t manage it.
What is the ‘grey fleet’? The term ‘grey fleet’ refers to all those vehicles that get used for work purposes that are not owned, leased or run by the employers.
They’re usually the employees’ own private cars, and according to industry figures, approximately 14 million drivers use their own vehicles for work in the UK.
The issue is that you need to manage those cars, and their drivers. It’s not enough to just pay them a mileage rate for using their own car and wash your hands of it. Why? Because if something happens to them while they are driving for business and you haven’t checked they are insured for business use, fit to drive or the car is roadworthy, you could be liable for prosecution.
It’s also not just driving for work in the sense of doing thousands of miles a year visiting clients that you need to consider – even running errands such as going to the cash and carry to buy tea and coffee for the office kitchen is deemed driving for work. That said, commuting doesn’t come under the remit of driving for work purposes.
So you need to manage the grey fleet to ensure it will not put you in the red. Fortunately, if you follow a few fairly straightforward steps, you should be covered.
1. Get an idea of your grey fleet usage
The old adage that you can’t manage what you don’t measure is very true here.
Do you know exactly who is using their car for work trips, and how many miles they are doing? If they are putting in expenses claims, then it should be fairly easy to get an idea of the scale of grey fleet usage, and once you have collated this information, you can decide what to do about it.
On top of this basic data, you could delve a little deeper and find out in what ways, and why, they are using their own car. For example, if you are offering a generous mileage allowance to account for fuel, servicing and depreciation, then it might be that some drivers view it as a handy money-making exercise, despite the fact that cheaper forms of transport might be available for certain trips. Or it might be that they just don’t know any better, or it hadn’t occurred to find a more efficient way of travelling.
Also, on a related theme, you could undertake a few checks of claimed mileages against actual mileage. It’s the classic expense fiddle, to add a few miles to each journey thinking nobody will notice. But it all adds up over time, especially if a lot of employees are doing it.
Then there’s the issue of whether they really needed to make the trip, and management of that comes under the next section.
2. Signing travel off
Once you have a clear picture of when, why and how your employees are driving for work in the cars, you can start to look at other options.
For example, are they making long trips out of the office for the day to have a quick meeting that could have easily been held over the phone or on Facetime or Skype, or just have worked from home and dealt with their work from there?
One of the issues with grey fleet is that it is very easy for an employee to hop in their car and go, with little recourse except when the expenses claims come in later. If you can get in front of the problem and deal with it, you should be able to stop any problems further down the line.
Perhaps, if your grey fleet costs are especially high, it might well be worth investing in a pool car, joining a car club or looking at daily rental, where you can much more carefully manage usage and costs.
Managing the issue is key: if you have a process in place whereby any employee going out for work in their car has to get sign-off to do so from a manager, you might find usage starts to decline and you save money as a result.
3. Get them checked
Employees should only be able to use their car for work if they have demonstrated to you they are fit and legal to drive.
In order to put a process to ensure this in place, you need to have a drivers’ handbook which spells out exactly what is required of them. Every employee should read it and you should have a record that they agreed to adhere by its principles. It’s not legally binding, but if anything happens, it will demonstrate to the authorities you have put a process in place.
While a handbook can be quite extensive, and you can get versions of it online to adapt, there are a few basic demands all handbooks should contain:
- That they have a valid driving licence and report all offences.
- They have insurance which covers driving for business (evidence of this should be supplied to you).
- They are fit to drive, which includes eyesight and have no undeclared health conditions which could affect their safety on the road.
- That they will abide by the rules of the road.
- That their car is in roadworthy condition at all times, and has up-to-date VED (Vehicle Excise Duty), MoT (Ministry of Transport test) and other relevant certification.
- They understand what to do in the case of an accident (you may need to spell out what processes and communication you expect to happen)
Then, to be on the safe side, you could employ a licence checking company to check all your drivers periodically to ensure they have not been banned and not told you. It’s a rare occurrence, but not unusual, if their job is on the line to hide driving disqualifications.
4. Ensure vehicles are fit for purpose
The major problem with the grey fleet, as opposed to a company-run fleet, is the age and condition of the cars. According to the British Vehicle Rental and Leasing Association, the average grey fleet vehicle is more than eight years old, which is nearly three times the age of the average company car.
With this comes a number of concerns. For a start, those cars are likely to be less economical, which means either you will be paying out more in fuel, or the employee will be looking to recoup the extra expense, however they can.
Another concern is you don’t have control of how grey fleet cars are being maintained, or if they are being maintained. So your grey fleet policy should contain minimum vehicle standards.
You might set an age limit, and certainly should demand documentation of servicing work and MoT certificates and also evidence of breakdown cover. Some firms even demand a particular level of crash test-worthiness and emissions standards, but you may find this a step too far.
On a more practical level, it might be worth doing spot checks in the company car park. One of the biggest problems of grey fleet are tyres: while company cars are maintained and checked regularly, grey fleet cars and their owners may well be less vigilant about a cost issue such as replacing tyres, and a quick check of tread depth levels might be revealing. It will probably also give you an indication of those who don’t take looking after the roadworthiness of their car quite as seriously as others.
Finally, don’t panic!
You’re a small company with your energy channeled into growing. Leaving your employees to their own devices when it comes to their cars might have seemed easier, but unfortunately it’s not and the penalties for employees out on business in dangerous vehicles could end up on your doorstep.
So this might seem like a major job that you suddenly need to undertake, but a lot of it is down to good practices and reporting structure. Alternatively, if you just don’t have the time, there are lots of fleet management companies who can put systems in place and do all the legwork, chasing and documenting for you.
They have online systems that will make it surprisingly straightforward, and actually might help you to understand the way your business operates even more acutely than you did before.
by Steve Moody for startups.co.uk (2018)