As a business owner, if your workforce operates on the roads, it is likely that you are responsible for a grey fleet. Here, van lease specialists Northgate outlines everything you need to know about the grey fleet and some alternatives which you may benefit looking into at your business:
Defining grey fleet
If you use vehicles on a regular basis for business purposes, but they are not owned by the company, you are operating and responsible for a grey fleet. As a result, a grey fleet driver may be someone who uses a vehicle that was purchased via an employee ownership scheme, gets behind the wheel of a privately rented vehicle or simple uses a vehicle that is privately owned by the employee themselves. When they are driven on company business, fuel expenses are usually covered or in return for a cash allowance — and so will see the responsibility fall under the employer.
An employer’s legal duty
If your business operates a grey fleet, as an employer, you must be aware of The Health and Safety at Work etc Act 1974 when it comes to having grey fleet drivers within their business as well. This is because the act underlines that it is the requirement of employers to ensure the health and safety of all employees while at work, so far as is reasonably practicable. It also stresses that employers and employees have a responsibility whenever they are engaging in work-related driving activities to ensure they are never putting others at risk.
The Act outlines that an employer will have the same legal duty of care to be aware of for grey fleet drivers as they do for anyone who is behind the wheel of a work supplied vehicle.
British charity the Royal Society for the Prevention of Accidents (RoSPA) has this online service available which helps employers with grey fleet management, including legal duties. Not only does the system enable organisations to record details like driving licence validity, insurance details including business use, MOT certification and road tax validity, but once recorded it can alert each relevant individual driver and line manager of dates when any of these items are up for renewal.
A report commissioned by the British Vehicle Rental and Leasing Association (BVRLA) titled Getting to Grips With Grey Fleet has suggested that employers across the nation are racking up a bill of around £5.5 billion each year to cover the grey fleet. This could be because there is close to 14 million grey fleet vehicles on the road across the UK, according to Lex Autolease’s annual Report on Motoring for 2016.
According to research by the Energy Saving Trust, grey fleet vehicles are driven for a total of 12 billion miles a year — emitting 3.5 million tonnes of CO2 in the process.
John Webb, who is the principal consultant at Lex Autolease, was also keen to point out: “Worryingly, 22 per cent of fleet managers think there are no serious risks to the company from employees using their own cars for work. But driving is the most dangerous activity for most employees while at work and 62 per cent of private car use is for work-related activity, so duty of care, regardless of the vehicle’s ownership, should be a top priority.”
With grey fleets racking up big figures, the BVRLA have called for bosses and policymakers to rein in the grey fleet, in that the trade body has set a target for these two parties to achieve a 50 per cent reduction in mileage and costs by 2020.
What alternatives are available?
As a business owner, you don’t need to rely on grey fleets – there are alternatives you can consider.
Vehicle rental services
You could decide to use vehicle rentals for business purposes, whereby you can have brand-new vehicles on a flexible basis – and once the agreement is in place, you can monitor usage, miles, emissions and costs with in-depth management reporting. Vehicles can be delivered for the company to use for as little as an hour at a time or for a month or more.
Another way to wave goodbye to the number of grey fleet vehicles at an organisation is to lower the business mileage threshold to which employees will be eligible to get behind the wheel of a company vehicle.
Lex Autolease’s John Webb acknowledged: “This means that the business has more control, or at least some say, over the car that drivers have.”
However, Jon Burdekin, the head of consultancy services at business mobility provider Alphabet, was also keen to point out: “I wouldn’t say it is necessarily the most strategic way to manage your grey fleet.
“If you’ve got somebody who’s doing 10,000 business miles a year in their own car, then there is an argument to say they should have a company car because they are more than an occasional user. However, I wouldn’t say increasing the company car fleet is right. It is an option, of course. You can give every single employee a car, but it’s using a sledgehammer to crack a nut.”
Salary sacrifice schemes
When vehicles are used for company business, a salary sacrifice scheme could be introduced to reduce reliance on grey fleets. Employers could give employees the chance to relinquish a part of their salary and in return receive the non-cash benefit of a new lease vehicle.
According to David Hosking, the CEO of salary sacrifice market leaders Tusker: “They … meet duty of care concerns and, by introducing mandatory licence checking and automatically providing business insurance, the schemes ensure that the company and its employees are fully covered.”