Grey Fleet: A problem waiting to happen

The grey fleet should be of concern to all organisations. Those privately-owned vehicles used by employees while ‘at work’ are difficult to manage in terms of meeting any organisation’s basic duty of care responsibilities, not to mention corporate social responsibilities (CSR), in terms of the environment. They need to have measures in place to ensure that grey fleet vehicles are ‘fit for the purpose’, roadworthy, properly maintained, taxed and insured, which unfortunately is not always the case.

In the public sector alone, the former Office of Government Commerce (OGC), now the Efficiency Reform Group (ERG), estimated a while back that nearly 57 per cent of ‘at work’ mileage was 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.’ Potentially, therefore, the grey fleet is a problem waiting to happen.

As the above figures indicate, the grey fleet may be much larger than imagined, especially if eligible employees have taken ‘cash’ rather than a company car. Historically, this happened at a time when company cars were unfairly taxed as a perk. Now attractive BIK rates linked to low CO2 emissions, allied to wide choice, make this no longer the case. Indeed, many responsible organisations are taking steps to encourage cash takers back into company cars and introducing attractive car salary sacrifice schemes.

UK road deaths and injuries
The latest government figures show that the number of deaths on Britain’s roads rose by three per cent overall last year to a record low of 1,901 in 2011. Car drivers and passengers accounted for 46 per cent of deaths, up six per cent, and pedestrians for 24 per cent. These deaths saw the sharpest rise, up 12 per cent.

The number of ‘at work’ deaths now account for over a quarter of overall road deaths. The figure of 559 ‘at work’ deaths represents 29 per cent of the total. While, we have yet to see the first successful prosecution under the 2007 Corporate Manslaughter and Corporate Homicide Act involving an ‘at work’ driver, meeting duty of care responsibilities should remain a top priority.

Overall, there are three main reasons for tackling grey fleet – health and safety, cost savings and the environment.

Health and Safety
The two main pieces of current legislation to be mindful of in meeting duty of care responsibilities are the Health and Safety at Work Act 1974 and the UK Corporate Manslaughter (England, Wales and Northern Ireland) and Corporate Homicide (Scotland) Act 2007. The Health and Safety at Work Act 1974 requires employers to ensure the health and safety of all full and part-time workers while ‘at work’, as is reasonably practicable. The Act covers all work-related journeys including drivers in company vehicles, using their own cars or other vehicles for business use, temporary drivers, freelance drivers and agency or contract workers. The ‘Driving at Work: Managing work‑related road safety’ guide highlights the legal responsibilities of employers to comply so far as is reasonably practicable with the Health and Safety at Work Act, stresses the benefits of managing work-related road safety and suggests how it should be managed and road risks assessed.

Employers need to consider driver competency and training; driver health; knowledge of basic vehicle checks; vehicle suitability, condition and maintenance; a valid MOT certificate if required; and safety equipment. Other considerations should even include adequate travel time allowance and proper route planning.

The HSE guide extends to the use of privately-owned vehicles on business trips. Employers can be liable if employees use an un-roadworthy vehicle on company business. Employers have a duty of care to ensure they have checked employees hold a valid driving licence, are monitoring the maintenance history of the vehicle and that the vehicle insurance also covers business use. Many organisations still do not check driving licences or that vehicle insurance covers their ‘at work’ grey fleet drivers.

Besides conducting a professional risk assessment audit of both vehicles and staff, employers need to have an agreed comprehensive ‘driving at work’ risk management strategy and ensure it is complied with. In the unfortunate event of an ‘at work’ road accident, employers need to be able to provide evidence that they have taken ‘reasonably practicable’ steps to manage their duty of care responsibilities to their employees including grey fleet drivers.

Following an accident, employers failing to act on the guide run the risk of facing significant fines under the Health and Safety at Work Act 1974. Directors and senior management can also face large fines and even possible prison sentences. The UK Corporate Manslaughter (England, Wales and Northern Ireland) and Corporate Homicide (Scotland) Act 2007 makes it possible for an employer to be prosecuted as the result of the failings of senior management.

Under the Act, all employers have a duty of care to ensure the safety of their ‘at work’ drivers. The Act makes 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; it just needs to prove the fatality resulted from a gross breach of the relevant duty of care by the organisation as a whole.

Under the Health and Safety at Work Act 1974, the fine will be seldom less than £100,000 and more likely several hundred thousand pounds. Under the UK Corporate Manslaughter (England, Wales and Northern Ireland) and Corporate Homicide (Scotland) Act, a work-related road death will result in an organisation being fined rarely less than half a million pounds and more likely several million pounds. In addition, a publicity order could be imposed on every organisation found guilty. This could range from advertisements to an order for all customers to be informed of the conviction.

Cost Savings
Employers should seriously review what they pay grey fleet drivers to use their own vehicles. The mileage rates may not make financial sense, especially if they have many grey fleet drivers covering high mileages. Sewells and The Energy Saving Trust conducted research which flagged up that just under a third of companies allowed their employees to drive privately‑owned vehicles more than 7,000 miles a year ‘at work’ and reimbursed them nearly £3,500 each.

The same research also showed that a quarter of grey fleet vehicles covered more than 10,000 miles per annum on employer business. For many organisations a grey fleet can cost them more than a company car fleet. Many grey fleet drivers see business mileage reimbursement as a potential money-making exercise, costing an organisation unnecessary money. Currently, employees travelling on their behalf ‘at work’ are reimbursed at Approved Mileage Allowance Payments (AMAP) rates – 45 pence per mile. This is significantly higher than typical Advisory Fuel Rate (AFR) payments of 12 to 14 pence per mile for a company car driver.

For employers, a practical ceiling for requiring employees to use a daily rental vehicle rather than their own privately-owned vehicle might be a maximum daily distance of 100 miles at the above standard rates. Above 100 miles, it may cost more for an organisation to reimburse a grey fleet driver.

The Environment
Given that the UK Government is committed to halving carbon emissions, the resultant CO2 emissions-based vehicle taxation regime has resulted in an astonishing choice of vehicles available with CO2 emission levels below 120g/km. And the number with emissions below 95g/km is growing daily.

Against this backdrop, employers looking to significantly reduce their CO2 emissions as part of their CSR can easily operate a carbon neutral transport policy as a first step towards running a greener fleet. The only obstacle in the way is the grey fleet.

The majority of grey fleet vehicles are older than company car vehicles and therefore are higher polluters. In the public sector, the average age of a privately-owned vehicle used ’at work’ is 6.7 years old. In comparison, the average age of a company car is around 18 months based on the current trend of replacing company cars every 37 months. SMMT figures confirm that the average new car sold in the UK in 2011 emitted just 138.1g/km of CO2, 4.2 per cent lower than the 2010 figure and 23 per cent better than in 2000. New technology, improved fuel consumption and better overall consumer awareness are the principal contributors to this continued progress. According to the SMMT, 46.8 per cent of cars had emissions below 130g/km CO2.

Managing the Grey fleet
Grey fleet drivers should be made 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’. Grey fleet drivers should be responsible for ensuring that their vehicle has a current vehicle registration document, valid vehicle excise duty disc, current MOT Certificate if over three years old, vehicle insurance covering business use and an up-to-date service handbook. The fleet policy should lay down that all these documents should be checked at least once per year. To protect itself, the employer should have on file a signed document authorising use of a specified grey fleet vehicle and covering the above. Going the extra mile, employers could insist on minimum safety standards based on European New Car Assessment Programme (Euro NCAP) ratings and minimum safety equipment (e.g. ABS and ESC). In order to reduce their carbon footprint, employers could specify an upper emissions limit and a maximum engine capacity too. Regular and occasional spot vehicle safety checks on both company cars and grey fleet vehicles should be the norm as part of an employer’s duty of care responsibilities. The fleet policy should state clearly that the grey fleet driver must hold a current driving licence valid in the UK for the type of vehicle used and advise the organisation of any endorsements. Driving licence checks should be undertaken annually, if not more frequently.

To encourage safer driving, employers should consider changing driver behaviour and attitude as part of their duty of care responsibilities. By influencing the way drivers actually drive through education, tips, training and awareness they can not only reduce the accident risk but also deliver other savings in the form of reduced fuel consumption. Fleet policy should seek to reduce all ‘at work’ journeys to a minimum by conducting a series of pre-journey assessments, challenging whether the journey is really necessary. If it is, the most economic form of transport should be chosen and car sharing considered.

Conclusion
The fleet policy will be ineffectual unless properly communicated and administered. It should also be regularly reviewed. By managing the grey fleet, organisations can meet duty of care responsibilities while at the same time making significant cost savings and minimising loss of productivity through staff absence, resulting from death or injury in ‘at work’ road accidents. Additionally, they can enhance their corporate social responsibilities, through achieving a lower carbon footprint.

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