Grey fleet vehicles are becoming increasingly common on UK roads, as more and more employers are incentivising staff to use their own car for business travel. In fact latest figures from the BVRLA (the trade body for the vehicle rental and leasing sector) put the number of grey fleet vehicles in circulation at an all-time high. Estimating that 14 million of the UK’s cars now constitute grey fleet use – 40% of all road users in Britain.
Here Bluedrop Services outline the reasons you should be aware of and dealing with your company’s grey fleet.
What is a grey fleet vehicle?
A grey fleet vehicle is a business vehicle that is privately owned, rather than company owned. Meaning the vehicle has been directly purchased or rented by an employee, rather than leased through their employer. There is often confusion between grey fleet cars and company cars. But the main distinction comes down to whom the legally registered owner of the vehicle is.
Why have a grey fleet?
Grey fleets are popular among employers who need road vehicles for their business operations but don’t want to invest in an-house company fleet. In most grey fleet models employees are simply reimbursed for their business mileage as an incentive to use their own car for business travel. Thereby relinquishing the business owner from any expenditure, besides fuel reimbursement costs.
What’s the problem with grey fleets?
Although a grey fleet business model might seem like the perfect transportation solution, in actual fact grey fleets are becoming an increasing problem on Britain’s roads. And that is something that’s falling back on employers, not employees, to address.
11 million of the total 14 million grey fleet vehicles in circulation are private sector. And together with totalling more than £2.7 billion in work-related accidents, grey fleets are costing employers almost £5 billion in mileage every year in the UK. Equating to 3.5 million tonnes of CO2 emissions.
It’s for reasons such as this that the grey fleet model is now coming under fire. With organisations operating a grey fleet ultimately being held accountable. And with prosecutions and penalties on the table, it’s important to know where you stand, and your liability, in terms of your grey fleet operation.
Your responsibility as a grey fleet manager
As a grey fleet operator the buck falls with you to ensure your drivers, and their respective road vehicles, are both fit for purpose and as part of corporate social responsibility, are responsibly looking at carbon reduction. This responsibility also includes having adequate insurance to cover business use, a valid driving license, and checks to ensure the vehicle itself is roadworthy.
That’s why it’s so important for UK businesses compensating their employees for private vehicle use to have a grey fleet management system in place. One that directly addresses your duty of care as an employer to your employees, but also demonstrates proactive measures to reduce your grey fleet’s environmental impact, and improve efficiency.
Predictive analytics is a process of capturing data, and using the data to gain insight about your grey fleet’s behaviour. Such as apps that measure mileage, speed, and breaking, to dash cams which record a driver’s journey. All of which can help you paint a clearer picture of your grey fleet’s performance.
Using a combination of one or more of these devices won’t only help you understand your fleet’s usage day to day. The other great thing about these types of systems is they allow you to verify expense claims for mileage. As well as provide a record of the driver’s actions and reactions on the road.
Establish company guidelines that govern grey fleet usage
Once you have a better understanding of your grey fleet’s behaviour you can instate a company policy that governs the terms of vehicle usage. All of which will help you run your fleet more efficiently, reducing overheads, and your organisation’s environmental impact.
These frameworks should explicitly outline acceptable vehicle usage. Giving clear parameters for what is considered reimbursable business mileage. You should try to reduce vehicle output by encouraging employees to consider alternative means to driving. Such as whether it’s more economical to conduct a meeting in-house, or remotely via conference call. As well as putting in measures that discourage car journeys within a specific boundary.
You can also investigate car-pooling initiatives to reduce one driver journeys, as well as bringing in sign-off procedures that require advanced approval for journeys made beyond a certain distance. All of which should discourage casual vehicle use, thereby reducing expense claims, and your fleet’s cumulative CO2 output.
Introduce checks to assess your drivers and their vehicle
One of the biggest misconceptions about grey fleets is that the registered vehicle owner will be liable for any insurance claims, penalties and/or prosecutions that result from an accident on the road. This is simply not true.
If an employee has an accident that results in loss of life, while undertaking business travel on your behalf, your organisation could be held accountable under the Corporate Manslaughter and Corporate Homicide Act 2007. Even if that employee was traveling in his or her own vehicle.
Employers ultimately have a duty of care to adhere to. And when you’re asking your staff to make business trips as part of their job role, that duty of care extends to making sure they, and their vehicle, are fit for purpose. So it’s imperative to introduce regular driving licence checks for all employees using their own car for business travel. As well as to ensure the vehicle is roadworthy and properly insured for business use. The latter of which can be verified through MOT certificates, and policy documents, together with vehicle spot checks.
Insurance – the grey area of grey fleet management
Insurance is one of the biggest grey areas when it comes to employee-owned vehicles being driven for business purposes. With very few employers taking proactive measures to ensure their drivers have adequate cover, or assuming that the responsibility to insure the vehicle ultimately falls on the owner.
A vast proportion of employees believe that having “commuting” cited in their insurance policy is enough to cover them for business travel. However in around 20% of drivers, this isn’t the case, and ultimately it’s the employer’s responsibility to check that the correct level of business cover is in effect.
Vehicle insurance covering business use actually falls into three distinct categories:
Covers business travel to locations and sites beyond the employee’s usual place of work. But excludes commercial use (such as the delivery of goods).
Also excludes commercial use but allows a second named person to drive the vehicle for business travel, in addition to the primary vehicle owner.
Allows for two named drivers on the policy and also covers commercial vehicle use, such as door-to-door sales, or the delivery of light goods.
In the majority of cases a privately owned or rented vehicle will not automatically be covered for the three classes of business use outlined above. And some insurance policies will specifically exclude business use of the vehicle as standard. For this reason it’s vital to check the wording of policy documents carefully, and adjust the level of cover to include appropriate business travel requirements.
Seek professional grey fleet insurance advice
As an employer it’s your responsibility to ensure your grey fleet drivers are adequately insured for the journeys they’re making. Failure to conduct checks to this effect could result in liability on your part, should a claim result. So it’s not in a business’s best interest to turn a blind eye.
If in doubt a fleet insurance broker, such as Bluedrop Services, should be able to assist you in understanding the level of cover your employees require, and finding a competitive policy. Only by consulting an expert can you have the peace of mind that your business operations are protected should the worst happen.