Grey Fleet Management

Grey Fleet Management has become widely used in the Driver Risk Management industry. Our blog is dedicated to assist in the clarification of the term and address how to comply with the existing legislation for both human and financial resources.

What is a Grey Fleet?

Grey Fleets are a collection of privately owned vehicles that are used for business purposes. They are often owned and used by employees, such as a private taxi company, who are later reimbursed by the employers for mileage or any other expenses. These vehicles are typically privately and personally owned by the employee, who will then use it to cover travel.

What are Grey Fleet Vehicles?

Grey fleet vehicles are owned and driven by employees, for their employers. The vehicles range drastically from business to business, from motorcycles to cars to HGV’s. For safety reasons, the vehicle must operate mechanically without any disruption, it must be road-legal and pass its examinations, including MOT.

What is a Grey Fleet Driver?

A grey fleet driver is an employee who owns and drives the grey fleet vehicle. These employees will be offered a cash allowance by the employer: a sum of money paid to the employee on a regular basis. The cash allowance value is set by the employer to ensure that the grey fleet driver can purchase.

The value of a Grey Fleet vehicle is usually set by the employer. This ensures that the employee can purchase an appropriate vehicle or begin to use a vehicle already that is in their ownership. At present, Grey Fleet vehicles make up 40% of the UK’s work vehicles, this amounts to over 14 million Grey Fleet vehicles on our road with 62% of private car use attributed to work related activity.  With the current trends of companies paying a variety of cash allowance methods along with the BIK (HMRC-Benefit in Kind) advantages diminishing, these figures will no doubt increase.

Grey Fleet Insurance Responsibility

Once an employee has made the decision to become a grey fleet driver, the obligation of responsibility related to the motor vehicle being used is theirs, and they must ensure that they notify their Insurance Company and to request cover for Business Use. Alongside this, many Insurance Companies will provide this cover for free; if a charge is made it is usually a nominal sum. The employee must ensure that this information is passed on their employer.  

Why do Organisations Favour Grey Fleet?

Many organisations believe that by increasing their grey fleet numbers and lowering their company car fleet this will reduce their responsibilities towards the employee, far from the reality. All road journeys carried out on behalf of the employer for their business are treated as work activities, the ownership of the vehicle is irrelevant under the raft of existing legislation, it’s the use to which that vehicle is being put at the time of any incident that matters. All vehicles must be safe and ‘fit for purpose’, legally, under the Road Traffic Act (1988). Any documentation related to each vehicle must be collected, collated and stored in a secure format. This means that no work journey should be carried out by any employee and expenses paid by the employer until the above criteria are met.

The Pros of a Grey Fleet:

Cost savings

By using employees personal vehicles for business avoids the large up- front payments associated with the purchasing or leasing of Company Vehicles.

Flexibility

Grey Fleet arrangements provide flexibility for businesses allowing employees to use their own vehicles for work related activities.  This is advantageous for a business who have fluctuating transport needs or those in rural areas where access to company owned vehicles may be limited.

Lower Burden

There is a lower administrative burden on the company human resources for overseeing certain aspects of a grey fleet. For example, they are not directly responsible for organising vehicle maintenance and repairs, Testing MOT, insurance and Vehicle Road Tax.  However, organisations must have systems in place to ensure that employees are taking responsibility for the aforementioned issues.

The Cons of a Grey Fleet

Safety Concerns

The biggest drawback of the grey fleet scenario is the potential vehicle condition and the associated safety risks. There are a host of statistics related to all aspects of motor vehicle safety, wear and tear and associated issues: for example, a lack of mechanical knowledge on the part of the owner/driver.  The Employer must be able to prove that they have robust and transparent systems in place that allows for the assessment of risk presented by grey fleet vehicles.

Legal and Compliance Issues

Grey fleet usage introduces challenges to any business. Employers must ensure that the employee’s vehicles are ‘fit for purpose’, mechanically safe and road legal under the Road Traffic regulations. Employees driving licences must be checked and details recorded. The driving licence categories must relate to the vehicle being driven by the employee.

Failure on the part of the Employer to comply with the above can result in them being considered culpable under the H & S legislation as well as the Road Traffic / Construction and Use Laws. The latter can be complex but Drive Alive, with its police traffic background is able to advise and guide, is seen as less expensive than using a solicitor.

Environmental Impact

Grey fleet vehicles may have varying levels of fuel and emission standards. Organisations must consider the environmental impact of their transport systems and try to mitigate emissions associated with their grey fleet.

Fuel Costs

This is an issue when employees are using their own vehicle for company business. Expense claims administration can be costly and time consuming. A fuel or EV Charge card can greatly reduce this burden, control the costs and offer an accurate statement of use.

The Responsibilities as an Employer for Grey Fleet Vehicles

The Health and Safety at Work etc. Act (1974) is the legislation that acts as a legal platform for employment. Companies must ensure the Health and Safety of all employees whilst working for their business, and an employee is working for them when behind the vehicle of a motor vehicle on business, regardless of the ownership of the motor vehicle. It is worth highlighting that the present legislation excludes those employees driving to and from the office to and from home.

The HSE specifically references ‘grey fleet’ in its Driving and Riding Safely For Work document, including the requirement for the vehicle and the driver to be suitably and adequately managed by their employer.

In the Grey Fleet Review (Driving for Better Business), which has surveyed 250 executive directors and 1000 employees who drive for work, there were some concerns. 53% of the directors surveyed believed that grey fleet driver safety is not the responsibility of the company, and only 38% said their company checks that their grey fleet drivers have insurance cover for business use.

“Drive Alive can support this figure though its own findings from DART that is being used by existing clients. Some drivers not only didn’t know they needed business use insurance but didn’t even know it was available.”

Even more concerning is the fact that 34% of drivers surveyed had never had their driving licence checked which is a legal requirement, and 33% did not have business cover on their insurance and therefore driving whilst for business they were uninsured. Employers must make sure that their grey fleet are safe, well maintained and legally compliant.

Differences between Grey Fleets and Vehicle Fleets

Grey Fleet

A Grey Fleet sees the onus of responsibility move across to the employee. They must ensure that the vehicle being used for the employer’s business is legally compliant: for example, is ‘fit for purpose’ related to commercial use that the vehicle is road worthy, properly serviced, that the tyres are legal and appropriate to the vehicle, a current MoT is available, and the vehicle is correctly insured (to include business use), and more. The employer must ensure that all relevant paperwork related to both Vehicle and Driver is collected, collated and stored on ‘the cloud’.

Vehicle Fleet

A Vehicle Fleet is usually managed by the Fleet Vehicle provider and to a lesser degree the Employer. Whilst falling on the provider, a level of responsibility is on the user (employee), who must ensure that the vehicle is serviced at an approved supplier and at the correct interval. There is often a less responsible attitude to the condition of the vehicle by the user with a ‘it’s not my car’ approach. This can result in financial penalties on the business at the end of the Lease period.

How an Employer can Manage Grey Fleets Effectively

Create a Policy

• Set parameters and restrictions around age, safety ratings, CO2 emissions, power, fuel type etc

• Create a policy related to the vehicle being used to ensure ‘Fit for Purpose’

• Measure Grey Fleet usage

• Create a mileage threshold

• Utilise telematics where they might help

• Communicate with drivers

• Ensure legal compliance

• Create a database platform on which to store this information

To discuss our Drive Alive Risk Tracker (DART), and how it can help you to ensure compliance without taxing your human and financial resources, please visit our page on DART or contact us.