Grey fleet vehicles – those owned and driven by employees for business purposes – make up 40% of the UK’s work vehicles. There are currently over 14 million grey fleet vehicles on UK roads, with 62% of private car use attributed to work-related activity.
As grey fleet vehicles are owned by employees, with essential maintenance and servicing arranged by them directly, they bring about a different, so-called ‘hidden’ risk to company fleets. In this blog, we explore the different types of grey fleet vehicles and drivers, unpicking how companies can manage the risks of grey fleet effectively, ensuring safety of the whole fleet.
Employer responsibility for grey fleet vehicles
Under the Health & Safety at Work Act, companies must ensure the health and safety of all employees while at work, which includes when driving for business – and this is true regardless of whether they’re in a company provided vehicle or their own vehicle – i.e. a grey fleet vehicle. In fact, the Health and Safety Executive (HSE) specifically references ‘grey fleet’ in its Driving and Riding Safely for Work guidance, including the requirement for the vehicle, and driver, to be suitably and adequately managed by employers.
However, Driving for Better Business’ Grey Fleet Review – which surveyed more than 250 executive directors and over 1,000 employees who drive for work – highlights some concerning shortfalls. More than half (53%) of the directors surveyed believed that grey fleet driver safety is not the responsibility of the company, and only 38% said their company routinely checks that their grey fleet drivers have insurance cover for business use.
More worryingly, 34% of drivers surveyed had never had their licence checked, and 33% said they did not have cover for business use on their vehicle insurance – and so are effectively driving uninsured for work-related journeys. Businesses also need to make sure their grey fleet vehicles are safe and well-maintained. VWFS’ own research from earlier this year, which surveyed 2,000 drivers, also found that almost one third of motorists are prepared to bypass a scheduled service due to the cost-of-living crisis – endangering both the driver and other road users.
Different types of grey fleet vehicles and drivers
Employees that have a grey fleet vehicle can be reimbursed on a pence per mile or fuel cost basis for business journeys. A business journey can be defined as ‘travel between the permanent workplace and a temporary workplace, or travel between home and a temporary workplace, or travel between two temporary workplaces on behalf of the employer and in order to complete work duties’. Vehicles used by employees under cash allowance schemes are also considered grey fleet and are subject to the same requirements.
Grey fleet vehicles and their drivers typically fall into two distinct categories: cash allowance and occasional business travel.
- Cash allowance drivers
Cash allowance drivers are those who receive a cash benefit in lieu of a company car. The cash allowance is added to an employee’s annual salary (usually per month) and is used to finance a vehicle and any associated costs of running that vehicle. They will typically only be reimbursed for fuel costs associated with their business journeys, as depreciation costs and running costs are included within the cash allowance payment. There is often more flexibility of vehicle choice associated with a cash allowance, however having a robust policy in place will protect businesses from having unsuitable and inappropriate vehicles being driven on business. For example, setting parameters and restrictions around age, NCAP safety rating, number of doors and even CO2 emissions. Drivers whose vehicles do no comply with the policy can have their cash allowance rescinded.
Over the last 5-10 years, the UK government has structured its Benefit in Kind (BIK) tax to encourage the adoption of low-emission vehicles. This has meant the BIK on internal combustion engine (ICE) vehicles has increased. As a result, some people not willing to switch to an electric vehicle may have chosen a cash allowance instead of a company car, as no BIK is payable on cars that are purchased or financed and owned by individual drivers.
- Occasional business travel (business mileage claimants)
This refers to drivers who use their own vehicle for occasional business journeys, but don’t receive a cash allowance. They will typically receive a higher mileage reimbursement than cash allowance drivers, which covers the vehicle’s depreciation and running costs.
Some occasional business travel drivers don’t make claims for their journeys, as they are so few and far between – however, these journeys, vehicles and drivers still fall under the same duty of care as a business’ company car and cash allowance fleet.
Managing grey fleet risk for employers
Because of the different types of grey fleet vehicles and drivers, it can be challenging for employers to effectively manage all grey fleet vehicles to meet their duty of care and environmental responsibilities.
However, it’s critical that grey fleet drivers – whether cash allowance or occasional business use – are identified and subject to the same driver compliance and driver risk processes that the company has in place for company car drivers.
If an employee driving on company business is involved in an incident, and their vehicle is not deemed to be in a roadworthy condition or adequately insured with business-use cover, the company may be liable for prosecution or third-party claims. This also applies if the driver isn’t legally or adequately licenced to drive, and the company hasn’t carried out licence checks.
To manage risk, employers should adopt a consistent approach to driver risk and compliance – whether looking at grey fleet or company-owned fleet vehicles. For all grey fleet vehicles and their drivers, employers should:
- Identify all grey fleet vehicles and drivers – including cash allowance and occasional business travel.
- Have a clear and robust policy that enforces minimum standards and requirements – and communicate this clearly throughout the business.
- Record driver and vehicle documentation – including driving licences, insurance, MOT, safety recalls and service schedules, and monitor when these expire or need updating. VWFS Fleet’s fleet management portal can help with this.
- Offer alternatives to grey fleet drivers, such as salary sacrifice schemes to provide greater visibility and control over vehicles being used on company business and encourage electric vehicle uptake. Create an easy pathway for cash allowance drivers to return to company car schemes.
- Provide driver risk assessments and training – to identify drivers that are at a higher risk when they drive and provide interventions to reduce and mitigate that risk.
With a cash allowance, as drivers are receiving a monthly payment from an employer in lieu of a company car, employers can also put in place more stringent policies and practices to guide the types of vehicles being used for company business. It is also important that the responsibility of cash allowance schemes does not solely rest with HR – they should also be influenced by company fleet decision makers, to leverage their knowledge and experience and ensure all grey fleet vehicles are safe and legal.
Enabling drivers without a cash allowance to use their own vehicles for occasional business travel should be a last resort, as it is much more challenging to ensure continued compliance. It is also good practice to introduce an upper annual mileage limit for occasional business travel drivers (and cash allowance drivers), and when employees near or reach this, they should then be considered for the company car scheme instead, as these allow greater control of risk.
Speaking with Alison Moriarty, DRiiVE Divisional MD, Matrix iQ, she says:
“Many organisations believe that increasing their grey fleet numbers and lowering their company car fleet reduces their responsibilities. Nothing could be further from the truth.
It is imperative that any journeys carried out on behalf of the business, are treated as a work activity. If a driver is using their own vehicle, it must be safe, legal, fit for purpose and all relevant paperwork should be checked for compliance.
No journeys should be carried out, or expenses paid, until the above criteria are met.
Grey fleet is often the hidden risk in your fleet, don’t be caught out!”
For support in managing the safety of your company’s fleet, get in touch with a VWFS Fleet expert today.
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