A Proactive Approach To Grey Fleet Management & Tracking
Whilst organisations continue to offer employees the use their personal cars for business purposes, the need for proper grey fleet management also increases.
There are legal and financial risks involved when you mismanage a grey fleet. To prevent your business from running into any problem, taking a proactive approach becomes necessary.
What is a Grey Fleet?
Simply put, a “grey fleet” refers to any privately-owned vehicle used by employees to fulfil business tasks.
This term encompasses all vehicles that fall under these categories:
- Privately-owned vehicles
- A vehicle bought through employee ownership schemes, as the employer usually manages the costs and majority of the risks involved
- A vehicle bought via cash allowances, wherein the employer gives the employee cash to purchase or lease a vehicle. This also covers vehicles that get discounts from leasing companies
- Privately-rented vehicles
In a grey fleet situation, the employees are reimbursed in the form of business mileage (typically a pence per mile basis). This is opposed to company vehicles where the employer provides the car, and the employee, in turn, would pay for benefit in kind for the vehicle.
In a lot of cases, those who are not eligible for company vehicles drive their own cars for business journeys.
How Big Is The Grey Fleet Issue In The UK?
Grey fleet in the UK amounts to 40 percent of all vehicles in the country—that is around 14 million cars. Due to this, business owners shell out more than £5.5 billion every year as they reimburse mileage claims and provide allowances.
This number of vehicles on the road contribute greatly to pollution. In fact, the grey fleet in the private sector emits 3.2m tonnes of CO2 and more than 7,000 tonnes of NOx for covering 11 billion miles annually. In the public sector, vehicles emit almost 450,000 tonnes of CO2 and 1,118 tonnes of NOx for 1.5 billion miles.
On top of that, more than 25 percent of all road traffic accidents are attributed to those who are driving for work purposes.
However, what is shocking is that 57 percent of all fleet owners surveyed say that grey fleet management is either “unimportant” or “very unimportant.” Only 17.3 percent saw the value of proper risk management.
Moreover, one in six companies does not carry any form of check on their grey fleet.
This led The British Vehicle Rental and Leasing Association to urge companies and the government to reduce grey fleet mileage and costs by 50 percent come 2020.
What Are The Problems With Grey Fleet?
Since these vehicles are technically not part of the company, owners face a different set of issues. Often, these risks are neglected, especially if the organisation operates their own fleet of company vehicles.
Among those that are problematic with managing grey fleets include:
- Insurance coverage – Since vehicles are used for business purposes, an employee’s private car may not be covered by insurance and servicing policies
- Vehicle sustainability – These vehicles should be able to function properly to take repeated business journeys. A vehicle’s age, condition, air conditioning, and a properly working ABS and ESP should then be taken into consideration
- Keeping track of all vehicles’ status – Vehicles, whether company car or grey fleet, should meet legal requirements (e.g. valid driver’s license, MOT certification, Road Tax validity, insurance details)
- Driver competency – All drivers, on top of having valid licenses, should be fit and healthy to take short or long business journeys
Managing grey fleets can be difficult due to a number of financial reasons:
- public sector employees experience pay restraints, giving them less impetus to give up any benefit (i.e. mileage reimbursement);
- poorly defined grey fleet management especially in the public sector; and
- in the private sector, the relatively low impact on personal taxation of a grey fleet is attractive to both owner and employee.
Keep in mind that you, as the business owner, are not exempt from legal ramifications of grey fleet managing.
For instance, the Health and Safety at Work Act 1974 covers the safety, health, and welfare of all employees affected by business activities. Failure to comply, which could then result in fatal accidents, can subject you to The Corporate Manslaughter and Corporate Homicide Act 2007. Punishment includes fines, reputation damage, and if convicted, imprisonment.
Benefits of Grey Fleet Management
Although there are a number of legal and financial consequences, there are also business benefits to proper grey fleet management:
- Less business disruption, thanks to fully-functioning vehicles that can deliver and/or take employees to destinations on time
- Fewer days lost to injury as vehicles are kept in top shape
- There is less need to repair and maintain vehicles, saving you costs
- Contribute to helping the environment, as relatively newer cars are more efficient with fuel consumption
- Little to no damage to business reputation
- Reduced running costs, as controlled business journeys would lessen mileage claims from employees
- Provide safer working environment
On The Right Track: Managing Your Grey Fleet Properly
If the risks are continuously neglected or altogether ignored, they can cost your business either legal or financial consequences. The damage to your reputation is also incalculable.
It then becomes all the more essential to manage your grey fleet effectively by:
1. Assessing risks
To prevent any untoward accident, you first need to get a good grasp of the risks your current fleet faces.
Certain data can give you the organisational risks you are looking for. You can look into the performance of each vehicles being driven, so you can diagnose any possible deficiencies. You can also look at mobile worker response times. If there was an accident, data from accident management providers or insurers can pinpoint its root cause.
Telematics systems can be of immense help in giving you accurate information on how your grey fleet vehicles are performing.
Sat Navs, for example, can provide data on where the vehicles are, the driver’s working hours, and fuel usage. These can also calculate the most accurate route to take that would cut fuel costs and save time.
2. Establishing policies
Formal policies can go a long way in implementing company and legal standards, as opposed to a verbal agreement.
You can update your employee’s code of conduct to cover grey fleet policies, including vehicle maintenance. Lay all these out in a driver safety handbook. Once you have presented an updated code, make the employees sign a declaration that they understood the new rules and agree to follow them.
3. Assigning a leader
If nobody would keep your employees accountable, chances are, they may slack off in following the rules. The HR or the health and safety manager may be better suited to keep your employees in check and implement the rules.
4. Checking all documentation
The competency of drivers also involves checking if they have sound documents, such as:
- Driver’s license validity, as well as looking into their history and endorsements (with the driver’s permission)
- MOT certificates, especially for vehicles that are over three years old
- High-risk profile drivers
- Insurance covering “business use” even if they are a grey fleet driver
5. Assessing all drivers
The health and fitness of your drivers are of paramount importance. Are they on medication and could these possibly interfere with driving safely? Does their eyesight satisfy health requirements of the law?
Also, assess a driver based on their skills. Do they need more training? How many endorsements do they have? Do they have previous accidents?
6. Ensuring vehicle safety
All vehicles, whether company or grey fleet, should meet minimum standards set by the Euro NCAP rating and safety systems (e.g. Electronic Stability Control and Antilock Braking Systems).
These should be recorded and regularly updated. On the part of employees, remind them to check their own vehicles for any issues especially with the tires, oil, brakes, or lights.
7. Managing driving hours
A fatigued driver is a potential hazard to be on the road. Manage the time your employees need to go from one place to another. Include in your policies a standard number of hours for driving and the break time needed in between.
Again, investing in a telematics system can give you accurate data on your drivers and vehicles’ status. This would help remind your employees that they need to take more breaks or that they are being on the road for too long.
Take A Proactive Approach In Grey Fleet Management
If your company uses grey fleet, take a proactive stance and ensure that all vehicles and drivers are fit to take company journeys. Refrain from allowing out on the road anyone or any vehicle that do not pass legal and company standards.
All these steps would ensure that you and your employees would continue with your day-to-day work without any untoward incidents.