Reduce exposure to grey fleet
25 September 2014
Author: Tristan Young
Employees that use their own vehicle for work has long been an area of risk management concern for business car operators, but is there a way to cut back on this grey area? Tristan Young finds out
Business car experts are unanimous in their view that if a fleet can reduce the amount of work miles driven by employees using their own cars and claiming back the mileage, then it's a good thing.
The reasons for this are numerous: so-called 'grey fleet' miles are less safe, less controlled, more expensive and more open to abuse.
It's all well and good highlighting these things, but how does a fleet manager go about cutting back either the number of grey fleet miles or the number of grey fleet drivers successfully without harming the business operation and with the support of those drivers?
As ACFO chairman John Pryor points out: "The key issues for businesses to gauge if they are looking to reduce grey fleet use are: calculating the cost of own car usage versus the cost of alternatives; confidence that they have the duty of care issue firmly under control; and to ensure that every journey is business essential to keep costs under control."
Fellow ACFO director Julie Jenner gives more detail, saying that reducing grey fleet usage, especially cash-for-car drivers, and encouraging employees back into company cars is usually primarily focused around cost: "Giving a driver a cash payment is one of the most expensive ways of providing a benefit as it automatically attracts a 13.8% National Insurance cost on top of the cash. Unless, of course, it's provided via a structured scheme that utilises the tax-free AMAP rates.
"Additionally, the provision of either a company car, or cash, should be cost neutral - there should be no advantage or disadvantage to the company dependent on the choice made by the driver, but all too often cash schemes cost considerably more to provide."
Jenner says that best practice also suggests the same principles and restrictions that apply under a company car policy should apply when an employee takes cash.
"If there is a CO2 limit on the car policy so there should be under cash. Such a policy maybe difficult to implement on existing private cars that drivers may have, but easy to give notice that when they change they will have to comply. It makes no sense, for example, to allow a driver to have a Porsche under a cash scheme if it's not available on the company car policy - [due to] increased fuel costs, fitness for purpose, etc.
"Once the two policies are aligned it usually doesn't make financial sense for the driver to opt for cash unless they genuinely are taking cash because they don't need a car and use public transport. Of course, there will always be people that fall into this category, but if they can be the minority then a few don't matter."