The term ‘grey fleet’ usually refers to vehicles owned by employees and used for business travel on behalf of their employer. This may arise as part of a formal business arrangement, because an employer only offers a cash allowance or as simple as asking a colleague to pop to the bank at lunchtime using his own car. There are no really accurate definitions.
In the UK, the long-term dominant position of the company car as a valuable benefit has tended to overshadow the size and importance of the grey fleet. HMRC have suggested that around 4 million employees use their own cars and make formal mileage claims for business journeys, compared to HMRC’s estimate of around 1 million company cars. On top of this we have many people who simply use their own cars on an informal ad hoc basis that is never recorded. Unlike the company car, whose age, mileage and general condition is determined by, and is the responsibility of the employer, how would a fleet manager know if an employee is using a non-company owned vehicle that may, conceivably, be uninsured or has failed its MOT? The grey fleet is too important not to be addressed properly.
Duty of care
Employers must consider all journeys made for business purposes as a potential at-work road risk, irrespective of who owns the vehicle.
Some employers regard the risks of employees using their own cars to be so high that such use is forbidden and all business journeys must be made in a company controlled or rental car. Other employers, including very many public sector bodies and government departments, rely heavily on employees’ using their own cars for business travel. Provided there is an appropriate risk assessment carried out, there is no reason why this could not be an effective solution.
As an absolute minimum an employer needs to ensure that all cars used for business are roadworthy and well maintained, have full and appropriate insurance cover, including cover for business use, and are ‘fit for purpose’. This may well mean that employees who anticipate that they may use their own cars on business purposes must have the vehicle, its documents and condition approved before any journey can be carried out, and that checks such as these should be carried out every year by the employer.
It may seem like an obvious solution to simply allow infrequent business travellers to use their own cars. Cost may not seem an issue if an employee only uses his car for one seemingly short trip, but lower cost alternatives could be easily overlooked, such as a pool car, daily rental car or public transport.
Many companies that allow employees to use their own cars for business reimburse the driver by paying the statutory Approved Mileage Allowance Payments (AMAPs). These rates are set by HM Revenue & Customs (HMRC) to represent both the cost of fuel and an element of running costs , but for many they are often seen as generous and encourage unnecessary miles.
Using the rates in force in 2013/14, if an employee undertook a 200 mile round trip in their car they could be paid £90.00; if they completed a 10 mile detour that would cost the employer a further £4.50. Taking in to account research regarding the number of employees who are prepared to be creative for financial gain, it’s easy to see why many drivers have been caught treating AMAPs as a blank cheque book, but just as importantly what is the incremental cost to the employer, compared to other options, such as a daily rental or pool car?
Image can be important, but this may pail in to insignificance in the event of a serious injury or driving fatality. A good fleet manager must always have safety and the avoidance of risk at the forefront of their thoughts. Although it may seem draconian, a strong policy simply forbidding anything that cannot be controlled, managed or enforced may be the safest option.
The fleet manager’s priority must be employee mobility and safety, but they must also be aware of reputational risk. If the fleet manager is unable to guarantee the reliability and suitability of the driver’s vehicle what are the potential implications for the business, especially if the driver cannot carry out their duties, and for example misses an important meeting because the car has broken down? Or, a vulnerable driver’s car breaks down on an isolated road late at night?
To address concerns related to the grey fleet, many businesses have taken advantage of new innovations such as salary sacrifice, which when allied to a new reduced carbon dioxide emitting car could potentially deliver financial savings to employees, while mitigating the obvious risk of allowing employees to use older, less reliable, less efficient and more highly polluting cars.