Grey Fleet – Is your business managing the risk?
Company car benefit in kind tax has increased in the last 12 months as WLTP (Worldwide Harmonised Light Vehicle Test Procedure) has seen the Co2 values of most cars increase.
Grey Fleet in simple terms is any vehicle which is used for making a work-related journey, but where the vehicle is not owned for leased by the business itself.
These vehicles are owned or leased directly by an employee and may be financed by an employee’s ‘cash for car’ allowance or out their own personal funds.
In the UK there is estimated to be over 14M Grey Fleet vehicles compared to 1M company cars.
Whilst benefit in kind tax on low Co2 cars is low and makes a very attractive proposition for an employee, the delayed transition to hybrid and all electric cars is taking time and many employees have chosen to opt out of their company car benefit and make their own personal arrangements.
What is a business’s legal obligation with regards employees driving their own vehicle on work related journeys?
In simple terms the legal obligation is the same as when the work-related journey is in a vehicle owned or leased by the business.
Under UK laws (Health and Safety at Work Act (1974) businesses owe exactly the same duty of care to employee’s driving their own vehicle as they do to one driving a company s vehicle.
Some simple steps to put in place to proactively manage Grey Fleet risk?
Employees need to understand that if a business allows an employee to use their own vehicle for work related journeys, the business has an obligation to ensure that the vehicle driven is legal and safe to drive.
By communicating clearly and monitoring the minimum requirements needed to allow personal vehicles to be used for work related journeys a business can manage the risk and liability.
1/ Valid driving licence – it is important that an employee has a full and valid driving licence for the class of vehicle being driven
2/ Vehicle insurance – For a personal vehicle to have insurance cover for a work-related journey’s the insurance cover must stipulate business use, if it does not the insurance may be invalidated in the event of a claim whist of a work-related journey.
3/ Regular maintenance and valid MOT – Ensure that the vehicle has been maintained in line with a vehicle manufacturer’s recommended servicing intervals
4/ Self Certification - Create a simple policy relating to Grey Fleet and ensure employees acknowledge the minimum requirements for using their personal vehicle on work related journeys. Also asking employees to confirm that minimum requirements have been met each time an expense claim relating to personal vehicle use is a good way to ensure that the obligations are fully understood by employees.
5/ Vehicle Age – Set a maximum age allowed for personal vehicles used on work related journeys. Older vehicles are more prone to engine and safety related faults, emissions are likely to be higher and more polluting and the general condition of the vehicle may not be in keeping with the businesses professional image.
6/ Journey distances and regularity – Using a personal vehicle for short incidental work-related journeys may be a sensible and cost-efficient way cover such requirements. However, for long journeys it may be safer and often more cost efficient to hire a short-term car rental or use public transport. Employees mileage should be monitored and polices in place if regular work-related journeys take place and a formal company vehicle would be more appropriate.
7/ Vehicle Safely Checks - Providing employees with a simple check list which they should complete prior to commencing a work-related journey is a simple but effective way of getting confirmation that the general condition of the vehicle is safe and fit for purpose.
For effective Grey Fleet management joint responsibility needs to be undertaken by the business and its employees. Clear and well communicated policies need to be in place and policing of such policies needs to take place regularly.