Fleets are waking up to the grey issue as legislation and the need to cut costs put the activities of drivers who use private cars for business into the spotlight.

The Office of Government Commerce (OGC), which has produced a best practice guide, describes it (without intended humour) as “a grey area, where millions of hidden miles are travelled each year, and often overlooked by employers and employees alike”.

Latest figures from the HMRC puts the number of private cars used for business at up to four million – it’s an issue that employers and fleet managers cannot ignore.

Duty of care

Employers owe the same duty of care to staff driving their own vehicles for work, as they do to employees driving company vehicles.

“There are a number of legal instruments in place to ensure that organisations honour duty of care,” says Adrian Walsh, director of RoadSafe.

These ‘instruments’ include the Health and Safety at Work Act, and the Corporate Manslaughter and Corporate Homicide Act.

The OGC’s best practice guide states that “both management and employees can be prosecuted for road traffic crashes involving work-related journeys, even when the driver is using their own vehicle”.

This means that organisations need robust policies and procedures in place to ensure that the car is fit for purpose, has a valid MoT, is insured for business use and that the employee has a valid driving licence.

Employers need to be able to demonstrate the steps they have taken to manage duty of care and it is here that fleet software can be a useful tool in helping a company or fleet manager to create that audit trail.

“You need to ensure that the drivers are no more at risk than if they were driving a company car,” Walsh adds.

High costs

Cost is another reason companies and fleet managers should not overlook the grey fleet. Walsh suggests that “the costs involved in the grey fleet are high”, making reference to companies having to reimburse drivers for using their cars for business.

“It’s a substantial cost management area,” he adds. “It’s an expenditure that the company is using, and like any other expenditure it needs to be managed.”

Costs could also arise if a grey fleet driver is involved in an accident and is found to have an invalid licence or incorrect insurance.

Again, software can assist by providing a driver licence checking facility.

It is also worth noting that many leasing companies provide this service and some even offer products aimed at managing grey fleets.

The OGC points out that cost savings can be made by reducing the number of grey fleet journeys and by promoting the most cost-effective method of transport.

Based on its experience of managing grey fleet travel, and the experience of the Environment Agency, it suggests a 20% reduction in grey fleet mileage of 10 million miles could generate an annual net saving of more than £1 million.

The green issue

The Energy Saving Trust suggests that, on average, grey fleet vehicles are older and create higher emissions than company vehicles or daily rental vehicles.

Combined with mileage rates, which may create the incentive for additional travel, it means that companies should look carefully at the impact grey fleet travel has on total emissions.

There are obvious environmental benefits from cutting grey fleet miles and promoting alternatives like video conferencing, public transport and hire cars.

Essential maintenance

Another issue with grey fleets is maintenance. Industry figures have recently spoken about their belief that grey fleet drivers are skipping on essential maintenance as a result of the recession.

Neville Briggs, managing director of CFC Solutions, says they have seen a number of instances on fleets where grey cars are not meeting minimum legal standards.

Just as a fleet manager polices the company car fleet, they need to ensure that grey fleet vehicles meet the necessary standards.

A fleet manager’s responsibility?

But is it ultimately down to the fleet operator to manage the grey fleet risk? Walsh says not.

“The grey fleet issue is fundamentally about managing staff and it’s the line manager’s responsibility to manage behaviour. The fleet manager’s responsibility is the vehicles.”

Jason Francis, Jaama managing director, adds: “Many companies have moved away from traditional company cars believeing they have eliminated a health and safety headache. They haven’t.

“Companies are responsible for employees who drive their own cars on business from a health and safety perspective as well as the vehicles driven.

“It is imperative that he same monitoring process is put in place for these people and their vehicles as for company-owned vehicles and their drivers.”

Walsh suggests that managing behaviour should include checking that staff are not over-tired and that they take the necessary rest breaks.

He also advocates checking the use of mobile phones.

 

Case study: VT education and skills

Business: Training, education and skills
Supply chain director: Mark Mardell
No of company cars: 450
Size of grey fleet: 550

Two years ago, VT Education & Skills (VT) made some key changes to its fleet policy to encourage grey drivers back into company cars and address three concerns: attracting and retaining the best staff, duty of care and reducing the carbon footprint.

Discussions with staff – current and recent leavers – raised various issues including the cost of running their own cars.

This not only included the servicing, tyres and insurance, but also the purchase cost of their cars which needed to be replaced on a regular basis.

Around 500 VT staff were travelling more than six million business miles a year in their own cars. Many were running older cars with environmental and safety implications.

Duty of care put the focus firmly on these drivers.

“We decided to deal with the problem by introducing a fleet of company owned cars that employees could use both for work and privately,” says supply chain director Mark Mardell.

“The key was to find a vehicle that was acceptable to the employees, would have a low emissions level, and for which there would be a good national service network that matched VT’s own wide geographical spread.”

Various ‘green’ models were tested and the eventual choice was the Vauxhall Corsa 1.3 CDTi, which was chosen for its fuel efficiency, low emissions of 119g/km of CO2, sustainability and low lease cost.

To qualify, staff needed to have been with VT for a given period and also to be travelling a minimum number of business miles.

The company estimates that approximately 30% of the eligible staff have to date been provided with a car. It expects more than 250 staff to take up the offer within a year.

“Risks to employees who drive on business have been reduced and the ability to retain high-calibre employees and to attract new people has been enhanced,” says Mardell.

“Overall costs related to the use of cars on company business are lower, more predictable and can be better controlled.”

Since February 2008, VT has saved some 45 tonnes of CO2. It hopes that if 70% of the 500 eligible employees join the scheme, the saving could eventually reach 340 tonnes a year, equal to the average annual output of 56 homes.

• Extract from Managing Your Company Cars by Professor Colin Tourick. Available to buy via www.tourick.com

 

Case study: Department for Work and Pensions

The Department for Work and Pensions (DWP) began a programme to reduce its business mileage two years ago.

After an independent review, the DWP introduced a new travel policy, prioritising different methods of transport.

It also put in place restrictions on grey fleet by setting a total daily limit of 100 miles and an annual limit of 1,000 miles in grey fleet vehicles.

This emphasised the expectation that employee-owned vehicles should be used as a last resort and for short journeys only.

Any journeys that exceed limits now have to be pre-approved by a senior manager and justifications copied to the travel team for review.

This has provided visibility on staff travel and an ability to challenge poor practice.

Campaigns have also encouraged the use of video conferencing, public transport and pool or hire cars.

The measures led to a 20% reduction in grey fleet mileage in 07/08 – from 45 million miles to 36 million – generating cost savings of £3.6m.

 

Case study David Langdon 

Business: International project and cost consultancy, providing managed solutions for clients investing in infrastructure, property and construction; past projects include Tate Modern, London, and the Eden Project, Cornwall
Head of procurement and supplier management: Neil Ashton
No of staff: 1,800 UK staff
No of company cars: 445 vehicles
Size of grey fleet: 1,350 casual users and 195 cash for company car opt outs

Neil Ashton, head of procurement and supplier management at Davis Langdon, has axed the use of private cars for business travel.

Instead, the 1,350 casual users who need to make journeys for work either use public transport or travel by hire car.

The decision was made in order to address the health and safety risks of at-work drivers.

“The duty of care risks faced by organisations allowing employees to use their own cars on business are so high that we decided to remove those risks completely,” says Ashton.

Case study: CGG Veritas

Business: Geophysics
Facilities manager: Peter Young
No of company cars: 31
Size of grey fleet: 60

Hitting standing water at 60mph in the early hours of the morning was enough to convince one fleet decision-maker of the safety credentials of Electronic Stability Control (ESC).

Peter Young, facilities manager at geophysics company CGGVeritas, said the safety device turned a potential accident into a “non-event”.

“I expected the car to slide but it held its course,” explains Young. “The ESC took control and maintained a straight line, which prevented it from spinning out of control. I was very impressed if not a little shaken.”

The experience resulted in all company vehicles ordered since January 2007 having ESC fitted as standard, as well as the safety device being made mandatory for all grey fleet vehicles by 2010.

In addition, all vehicles being driven for company business must have a driver’s airbag fitted from January 2007; a passenger airbag and ABS from January 2008; and EuroNCAP rating of IV and above by January 2009.

CGGVeritas treats both company and grey fleets in the same way and all registered vehicles are managed via its own Lotus Notes fleet management system.

It monitors completion of safety checks by drivers and sends out warning emails if safety checks are not logged within the time period.

The company’s fleet consists of 31 full serviced contracts, which includes 25 company cars, four pool cars and two essential user estate vehicles.

Its grey fleet comprises around 40 privately-owned cars supported by a cash allowance and a further 20 non-supported vehicles.

When the company started the process in 2003, it increased the cash allowance for its grey fleet drivers from £360 to £430 per month on the condition of meeting its new safety requirements. 

 

Key considerations when converting a grey fleet

• The current cost of your grey fleet – are the costs able to fund the running cost of the lease cars? If not, are you prepared to fund the difference? A major factor will obviously be the number of miles travelled and the cost of this.
• The cost of the lease and running costs of the car – consider the MPG of the vehicle against the type of use – if your staff travel mainly on motorways a hybrid vehicle might not be the right choice.
• What arrangement have you got in place to ensure the grey fleet is safe? There could also be a cost of your current scheme which would be saved or a cost of the management that you would need to put in place.
• What is your environmental policy? Is it strong enough to drive through a scheme such as this irrespective of the financial position? Is the company willing to fund any deficit?
• Would this be a valuable improvement of staff benefits? Can you put a value against this?
• What image are you trying to portray to the market? Is your brand important?
• What would your aspirations be regarding the vehicle? Clearly the vehicle needs to satisfy the business need – eg. size, comfort etc. However, the more expensive the vehicle the more difficult the business case becomes.

Tips for managing grey fleets

• Ensure that you have a written policy covering the risk management of grey fleets in line with Health and Safety guidelines that includes clear advice on the levels of maintenance you expect drivers to sustain for vehicles they are using at work.
• Make sure that your drivers receive copies of this document and that they understand what is required of them. For example, do they know how to check whether a tyre meets minimum safety standards?
• Have a structured system in place to provide a robust audit trail. Good fleet systems can issue reminders to drivers by e-mail or SMS about the regular checks that are needed on items such as tyres. This system should provide that the driver confirms when these checks have happened, with an escalation procedure if reminders are ignored.
• Driving licences need to be checked regularly. In house expertise is required to perform manual checks, otherwise, checking the DVLA database should be seriously considered. Our Licence Link software, which enables this to be done quickly and easily, has found grey fleet drivers who, for example, only held provisional licences or who had been banned following drink driving convictions.
• Insurance can be an especially difficult area for grey fleets. Ensure that your drivers have the correct class of insurance to ensure they are covered for at-work driving in their own vehicle under their own policy – in which case, copies of their documents are needed.
  Source: CFC Solutions