Ensuring your grey fleet is fit for purpose

The larger than imagined ‘grey’ fleet – privately-owned vehicles used by employees while at work – is of growing concern to organisations, many of whom have little or no control over it

In the public sector alone, the Office of Government Commerce (OGC) estimates that nearly 57 per cent of ‘at work’ mileage is covered by employees in privately-owned vehicles. That equates to around 1.4 billion miles a year covered by vehicles that do not necessarily comply with current law or are fit for the purpose.

The reason for the rise in the grey fleet is historical. It grew as a result of eligible employees taking ‘cash-for-car’ packages at a time when they were taxed unfairly for a ‘perk’ car. This changed in 2001 with a move to a Benefit-in-Kind (BIK) tax regime based on CO2 emissions. Thankfully, today, given the number and variety of vehicles with low CO2 emissions, there is a move away from ‘cash-for-car’ back to the company car and a proliferation of salary sacrifice car schemes.

The problem with a grey fleet today is that it makes fleet managers lives a nightmare in meeting basic duty of care responsibilities, not to mention corporate social responsibilities (CSR). They have to establish whether grey fleet vehicles are ‘fit for the purpose’, roadworthy, properly maintained, taxed and insured.

There are three main arguments for reducing grey fleet – health and safety, the environment and cost.

Health and safety
Organisations need to take account of the Health and Safety at Work Act 1974 and the UK Corporate Manslaughter (England, Wales and Northern Ireland) and Corporate Homicide (Scotland) Act 2007 in meeting their duty of care responsibilities.

The Health and Safety at Work Act 1974 requires employers to ensure, as is reasonably practicable, the health and safety of all full and part-time workers ‘at work’. The Act covers all work-related journeys including drivers in company vehicles, using their own cars or vans for business use, temporary drivers, freelance drivers and agency or contract workers.

To assist organisations on the above, the Health and Safety Executive (HSE) published a guide called ‘Driving at Work: Managing work-related road safety’ in September 2003. This guide, which has since been updated, underlines the benefits of managing work-related road safety and suggests some ways on how it should be managed, and road risks assessed. Areas organisations need to look at include driver competency and training; driver health; knowledge of basic vehicle checks; vehicle suitability, condition and maintenance; a valid MOT certificate, where required, and safety equipment. Other considerations include proper route planning and adequate travel time allowance.

The HSE guide also covers the use of privately-owned vehicles ‘at work’. Organisations can be liable if employees use an un-roadworthy vehicle on company business and should check employees hold a valid driving licence, monitor the maintenance history of the vehicle and ensure vehicle insurance also covers business use.

Organisations should also undertake a professional risk assessment audit of vehicles and staff, put together a comprehensive ‘driving at work’ risk management strategy and ensure its objectives are met. In the event of an at work road accident, evidence will need to be produced showing that reasonably practicable steps were taken to manage their duty of care responsibilities to their employees. This includes grey fleet drivers.

Organisations failing in their duties run the risk, in the event of an accident, of facing significant fines under the Health and Safety at Work Act 1974. Company directors and senior management could also face large fines and even prison sentences.

The UK Corporate Manslaughter (England, Wales and Northern Ireland) and Corporate Homicide (Scotland) Act 2007 came into force in April 2008 and makes it possible for a company to be prosecuted as the result of the failings of senior management. There has already been one high profile case involving a geological company.

Under the Act, all employers have a duty of care to ensure the safety of their ‘at work’ drivers. What the Act does is make it much easier to prosecute organisations for manslaughter following a work-related death, than previous legislation. The Crown Prosecution Service (CPS) does not have to rely on an individual being found guilty of gross negligence. All the CPS needs to do is prove the fatality resulted from a gross breach of the relevant duty of care by the organisation.

Other relevant legislation to be taken into consideration includes Management of Health and Safety at Work Regulations 1992, the Provision and Use of Work Equipment Regulations 1998 and Road Vehicles (Construction and Use) Regulations 1986.

The environment
As previously mentioned, the UK Government adopted a CO2 emissions-based taxation regime at the turn of the century, resulting in vehicle manufacturers now offering over 650 different models with CO2 emission levels below 120g/km. An example of the incredible advances made by vehicle manufacturers, BMW has now developed a 520d falling below 120g/km.

Operating a carbon neutral transport policy is therefore a simple, effective first step towards running a greener fleet and meeting CSR objectives. However, the majority of grey fleet vehicles are a stumbling block to this objective as they are older than company car vehicles and are higher polluters.

In the public sector, the average age of a privately-owned vehicle used on public sector business is 6.7 years old. This compares with the average age of a company car of around 2.5 years. And the environmental benefits of using a daily rental vehicle are better still, as the average age of daily rental vehicles is around 12 to 18 months.

The SMMT has confirmed that the average new car sold in the UK in 2010 emitted just 144.2g/km of CO2 – down 3.5 per cent on the 2009 figure, and over 20 per cent better than 10 years ago. The most recent FN50 published by Fleet News in November 2010 showed that average CO2 emissions for the FN50 vehicle parc of 1,299,295 vehicles fell below 140g/km for the first time ever.

Financial cost
Research by Sewells, in association with the Energy Saving Trust, revealed that 31 per cent of companies allowed employees to drive privately-owned vehicles more than 7,000 miles a year on company business. These employees received nearly £3,500 each. And nearly a quarter (24 per cent) of grey fleet vehicles cover more than 10,000 miles per annum on company business.

For many organisations a grey fleet can cost them more than a company car fleet. Employees travelling on their behalf at work are reimbursed at Approved Mileage Allowance Payments (AMAP) rates, now 45 pence per mile, compared to a more typical Advisory Fuel Rate (AFR) payment of 12 to 14 pence per mile for a company car driver. Many grey fleet drivers see business mileage reimbursement as a potential money-making exercise, costing an organisation unnecessary money and going against an organisation’s CSR commitments.

Today, the cheapest mile is the one never driven since the biggest fleet cost, after vehicle depreciation, is fuel. So measurable savings can be achieved through not only challenging the need to travel but by reducing the number of grey fleet vehicles and their usage. Since 2007/08, organisations engaged with OGC have reduced their grey fleet mileage by 22m miles. This generated over £8m of savings and reduced carbon emissions by over 5,300 tonnes. In the 2009/10 financial year, the OGC anticipated that grey fleet mileage would be reduced by over 40m miles, resulting in over £15m of savings.

How to manage grey fleet
Fleet policy should state that a grey fleet driver is responsible for ensuring that their privately-owned vehicle complies with Road Traffic law; is properly maintained, safe and roadworthy; and is fit for the purpose when used at work. Regarding the latter, fleet policy should make department heads responsible for ensuring this and that the employee is capable of fulfilling the trip.

It should further state that the employee is responsible for ensuring that their vehicle has a current vehicle registration document, valid vehicle excise duty disc, current MOT certificate where necessary, vehicle insurance covering business use, and an up-to-date service handbook. All these documents should be checked on a regular basis – at least yearly.

A stricter fleet policy should insist on minimum safety standards based on European New Car Assessment Programme (Euro NCAP) ratings; minimum safety equipment (eg ABS and ESC); maximum emission levels to meet CSR targets (eg 160g/km), minimum engine capacity (eg 1.2 litre); maximum age (eg six years) and maximum mileage (eg 80,000 miles).

Fleet policy should state quite clearly that the grey fleet driver should hold a current driving licence valid in the UK for the type of vehicle used and require them to advise the organisation of any endorsements. Again, an employer should check driving licences at least once a year.

Preferably, organisations should assess the driving standards of grey fleet drivers and offer further driver training where necessary, especially when an ‘at work’ road accident is deemed their fault.

Fleet policy needs to be put into action and properly communicated. The person responsible for fleet policy needs to ensure that employees are familiar with it, comply with it, are safe drivers and have access to a vehicle ‘fit for the purpose’ on ‘at work’ journeys.

It needs to be regularly reviewed and re-defined in line with changes to overall organisational strategy.

By managing the grey fleet through a carefully thought-through fleet policy, organisations can not only meet their duty of care responsibilities but also reduce their carbon footprint and improve their safety culture.

Written by Roddy Graham, chairman, Institute of Car Fleet Management (ICFM)

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