Employers are having to be much more flexible and creative with their fleet management in modern times, in order to meet the more diverse needs of their employees and to better control both their motoring costs and their asset management. One solution to this is the increasing use of grey fleet vehicles, which is a way in which employers can be flexible with fleet management solutions and control motoring costs more effectively, but it does come with a number of risks which need to be managed carefully.
What is grey fleet?
Grey fleet is a term used to describe vehicles that are not owned by a business but are used for business purposes. These usually fall into three categories:
- Vehicles purchased via an employee ownership scheme
- Privately leased vehicles
- Vehicles privately owned by an employee
What does grey fleet management involve?
Managing grey fleet vehicles is the responsibility of the employer when they are used on company business, and so the organisation has to have policies and procedures in place. The driver of the vehicle is usually provided with a cash allowance or fuel expenses to cover their usage costs. Also, the employer has to manage issues such as insurance compliance and also ensure that the vehicle remains roadworthy both legally and in terms of its physical condition, even though the driver might own the vehicle and be directly responsible for these factors themselves.
What are the risks involved in grey fleet management?
There are a number of factors that an employer needs to manage, and this should all be incorporated into a formal policy and management system.
- An employee’s insurance policy may not cover business use in terms of travel and/or storage of certain materials or equipment.
- An employee’s driving licence may not be valid.
- An MOT certificate may be out of date or invalid.
- Road tax may be out of date or invalid.
- Age and condition of the car – is it suitable for long trips or specific work use?
Employers have a legal duty under the Health & Safety at Work Act 1974 to look after the health and safety of employees at work, as far as is reasonably practicable, so the same procedures apply to grey fleet vehicles as to regular company vehicles.
How should a business manage grey fleet?
In basic terms, a company should build a simple database which is a visible and documented record that acts as a self-certificated process. This should be easily accessible and should include a record of who has grey fleet vehicles, what the vehicle is, how it can be used and what documentation is required. This system should record dates and have a mechanism for triggering reminders over expiry of documentation and for reviewing various forms of compliance.
More generally, a documented policy should exist which informs new employees what they need to provide in order to be able to use their vehicle as grey fleet. And it should offer guidelines over what is acceptable in terms of the condition of the car and documentation required. In most cases employers will not want employees to have points on their licence, for example.
Employers should also manage their grey fleet usage in terms of reviewing how many vehicles it involves and whether it is still cost effective. Sometimes, employers find that incentives for using grey fleet, ie. mileage allowances, are too attractive and therefore encourage grey fleet usage when that might not be cost effective for the business, so this should form part of a regular review of the grey fleet management system.