What exactly is 'grey fleet' - and what do you need to be aware of when operating it within a business? Paul Brown explains.
10 March 2016 | By Paul Brown
The Health and Safety at Work Act 1974 requires employers to take appropriate steps to secure the health and safety of their employees and others who may be affected by their activities when at work. This legislation also includes the time when they are driving for work, whether this is in a company fleet vehicle or in the employee's own vehicle.
But the Energy Savings Trust estimates that there are more than three times more 'grey fleet' vehicles than company cars in the UK, and some businesses could be putting themselves at risk of operating unregulated grey fleet.
1. What is grey fleet?
Put simply, grey fleet is any car or vehicle used for business travel or mileage that does not belong to your company. A grey fleet vehicle could include one bought through an employee ownership scheme, or a vehicle that's privately financed or owned by one of your employees.
Grey fleet is commonly operated in small or growing companies in a variety of sectors. A good example would be client service companies such as PR and design agencies who send staff out on the road to meet clients. If your staff drive to such meetings in their own vehicle - normally in return for fuel expenses or a cash allowance - you are operating grey fleet, which falls under your management responsibility as an employer.
2. Managing grey fleet
The complexities come into play when putting controls and restrictions into place for business use of private vehicles. As the vehicle is owned by the employee, it is much more difficult to be sure that adequate servicing and maintenance has been completed on the vehicle and that proper checks are carried out before journeys. Also, is the vehicle really suitable for the type of journey being made and - on an aesthetic level - does it project the right image for your business?
3. Take control
It is difficult for employers to exercise the same control over hazards to employees when they are driving on the road as in the workplace, but there are practical steps they should take to reduce the risks.
Fleet managers in larger companies as well as owners and managers of small businesses need to show that any grey fleet vehicles have followed relevant safety policies and that they have been included in regular risk assessments. A detailed record of vehicle details also needs to be kept including data on each grey fleet vehicle's servicing and MOT history, insurance policy and tax and driving licence checks. Efficient and effective management of these checks is vital, and there is a host of software and fleet management solutions out there that can assist with this - some more complex than others.
4. Insurance checks
How do businesses know that grey fleet drivers have the correct policy? Grey fleet drivers will often declare their vehicle as insured for business use and assume that they have the appropriate level of cover, but you need to ask to check their insurance certificate to be certain.
In 2014, business mobility company Alphabet stated that out of the 6,000 to 7,000 grey fleet insurance certificates it checks every year, almost 20 per cent did not have the appropriate cover. Two of the most popular types of cover chosen are 'social, domestic and pleasure, excluding commuting' and 'social, domestic and pleasure, including commuting'. However, commuting isn't sufficient. Many people assume that driving to another office or to see a client is 'commuting', but it isn't their usual, permanent place of work - these being the qualifiers for this level of cover. It's important to check each grey fleet driver's insurance certificate, however, this can be time-consuming if you have a significant number of grey fleet drivers and are new to the responsibility. If in doubt, challenge your employee to obtain confirmation from their insurance company - or call in the expert.
5. The benefits
Yes, there can be some benefits to operating operate grey fleet - especially for companies that want to expand their fleet of cars at a lower cost. For example, if you're a company that doesn't require your employees to travel business mileage regularly, you save money by not investing in a long-term lease contract to give them access to a vehicle.
Costs can also be saved on associated expenses such as repairs, maintenance and fuel as the grey fleet driver covers these. But you as the employer still have ultimate responsibility for checking that your employees' vehicle is insured and maintained for business mileage - and this can sometimes be difficult to achieve if you are running a small business minus the dedicated resources and knowledge.
The most feasible alternatives to grey fleet vehicles are car rental or short-term flexible car leasing. Schemes such as corporate car sharing and car clubs are also seeing a rise in popularity at larger organisations in particular. If you're after a vehicle immediately and for less than a day, car rental could be a good choice as most companies now allow customers to rent from just one hour.
A more permanent solution comes in the form of leasing, where you'll be provided a fixed monthly cost solution with no surprises - safe in the knowledge that all vehicles are provided with up-to-date service records and are safe for your employees to drive. Continuing fleet management and support advice from a specialist can also improve peace of mind.
If you are unable to commit to a traditional vehicle lease, then short-term leasing contracts are also popular. These allow you to access vehicles for your business when they are required, with the flexibility of a rolling contract.
Paul Brown is managing director at Cars on Demand