The grey fleet is an important, but often neglected, aspect of fleet management. It consists of employee-owned vehicles, bought with their own money or via company cash allowances and reimbursed for business mileage on a pence per mile basis. There are an estimated four million grey fleet cars in the UK – more than three times the number of company cars. Therefore, it is crucial to identify opportunities to reduce emissions and costs.
For many organisations, eliminating grey fleet will not be practical and for some employees and journeys it will be the best option. However, it must be managed properly, and that requires a clearly communicated, well developed policy.
The business case
Many organisations spend a significant amount of money on reimbursing employees for mileage. Managing the grey fleet carefully can reduce those payments.
Diligent management of the grey fleet, including accurate recording of mileage and expense claims, can also prove
invaluable in the event of an HMRC audit. However, the benefits are not all financial.
The law is clear – an organisation has a legal duty of care to an employee, regardless of vehicle ownership.
Grey fleet vehicles tend to be older and less well maintained, thus increasing the risk to your staff. Newer cars have more advanced safety features such as airbags and ABS, and higher NCAP safety ratings.
Assign responsibilities: Lack of responsibility is one of the key reasons the grey fleet is so often overlooked.
In organisations that have one, a fleet manager is likely to be the best person to assume responsibility for the grey fleet. Otherwise, finance and HR departments should work together to appoint an individual who can take responsibility.
Whoever is responsible, establishing a working group to assist with the development and implementation of a grey fleet policy is recommended.
The following departments may be required to establish and implement it: human resources, finance, health and safety, and environment/sustainability.
Benchmark the existing grey fleet: Benchmarking the grey fleet is a crucial first step toward creating a policy.
A number of questions should be asked about the drivers and their vehicles, what journeys they are making, how much the journeys cost and what management controls are in place.
If obtaining this information proves too difficult, the record-keeping surrounding the grey fleet may be inadequate. At this stage, data collection procedures should be reviewed and new systems established, so that a more accurate picture of the grey fleet can be developed.
During the benchmarking process, you may find that the wrong people are in the wrong cars. For example, there may be grey fleet drivers doing more than 10,000 business miles a year and company car drivers doing fewer than 5,000.
It may be necessary to conduct a review of the grey fleet as part of a wider fleet and travel policy review, and consider providing a salary sacrifice or company car for high-mileage drivers.
To comply with health and safety legislation and the HSE’s Driving at Work guidance, any grey fleet policy should include statements relating to the vehicle, the driver and the journey.
The employee is required to meet their responsibilities regarding the suitability of themselves and their vehicle when driving for business purposes. Crucially, however, the employer has to ensure an employee has done so.
The following measures should be considered as part of a policy for managing the grey fleet:
The driver: The organisation must satisfy itself that all grey fleet drivers have a valid licence and are not disqualified.
The employee is responsible for holding a current driving licence, with up-to-date information on endorsements, and for producing this for regular checks by management.
Licence checks, which should be carried out annually, help to identify drivers with endorsements on their licence.
Drivers’ insurance details should be checked to ensure that every grey fleet driver is insured to use their vehicle for business journeys. Drivers should hold breakdown assistance cover. Ideally, the above checks will form part of an annual risk assessment for each grey fleet driver. Driver assessments and training should be considered to help address any risk concerns.
The vehicle: Record information about grey fleet vehicles, such as make, model, registration number, date of first registration, fuel type, CO2 emissions and NCAP rating.
The employee is responsible for ensuring their vehicle complies with road traffic law, is in a safe and roadworthy condition and is fit for purpose.
The employer should carry out annual checks including ensuring that MOT certificates are current.
The employer should set minimum vehicle standards for the grey fleet, including NCAP ratings, emissions levels, required safety features and essential breakdown cover.
Consider imposing standards such as maximum age and CO2 limits.
Ensure there is a suitable reporting system in place to record any accidents that occur while an employee is driving their own vehicle for business.
Pay the same mileage reimbursement rates for all vehicles and engine sizes. Paying higher rates for larger vehicles indirectly encourages higher emissions and costs more money.
The journey: A grey fleet policy should seek to eliminate all unnecessary business journeys.
Staff should follow a travel hierarchy, ensuring that the journey is necessary, and selecting the most appropriate form of transport.
Line managers should be responsible for ensuring that each journey is necessary and that the most suitable mode of transport has been selected.
Communicating the policy
It is recommended that a grey fleet policy declaration is produced, which must be signed by the driver to indicate that they have read and understood the policy. This will help to communicate the policy and to gather evidence that drivers have been made aware of their responsibilities.