It’s the same old story. Business are constantly looking for new ways to save money by utilising the web and new technology, to the extent that it affects almost everything, including how we drive. Looking at the car industry, although in general there has been a long move toward more safety, there has still been a lot of additional government legislation, aimed particularly at business use, and this has had it’s effect on costs and the working environment too, so is it any wonder many business are now looking at running a grey fleet?
So what is a Grey Fleet?
A company fleet is owned by the company, a grey fleet is where the vehicles are owned by the drivers themsleves. Many businesses are looking to outsource fleet requirements, putting the onus for running and maintaining vehicles on the individual drivers. This involves various systems of remuneration, such as cash for car schemes - where an employee is given the money to go and purchase their own vehicle to be used for work, or owner/driver schemes where an employee may be paid an allowance for the use and upkeep of their own vehicle for business purposes.
Why doesn’t everybody have a grey fleet?
First a bit of history: In the early 90′s there were approximately 5,800 fatalities, and less then 20m vehicles, on British roads. In 2003, government figures showed a third of road deaths were people driving on business. The government at the time were looking for a significant reduction in road deaths of 40%, and decided to concentrate partly on businesses to help achieve this. How? By using the Health & Safety Executive to define the car used on business, as a “place of work”, and therefore it now comes under health and safety at work legislation. But this was always going to happen at some point. Time driving used to be seen as “dead” time in terms of getting business done, but technology has brought us the mobile office, consisting of mobile phones, laptops and access via mobile internet to office documents such as emails. Nowadays, the car really is the mobile office.
Since a fleet vehicle is now seen as a place of work, under health & safety law, the business employing a driver, has a duty of care to that employee when they are driving on business. In order to demonstrate compliance, a business now has to have a work related road safety policy, a system of management in place for risk assessment and to ensure the policy is adhered to, plus written records showing all this for audit purposes. Clearly, all this increases the complexity and therefore the money needed to keep a fleet on the road.
For instance, on average, 80% of accidents are down to 20% of drivers, so in all likelihood, there are going to be a few drivers on each fleet identified as needing further training before being permitted to drive on company business. There is also going to be some system needed concerning driving licence checks, current MoT certificates and further safety checks, so when an accident does occur the company can show they have done everything necessary to fulfill their duty of care.
And it’s worked: Last year (2009), there were more than 30m vehicles using Britain’s roads but only 2538 fatalities. Admittedly, some of this is down to new safety technology introduced by the manufacturers, but where company fleets are concerned, vehicles are generally less than 3 years old and tend to be well maintained on lease contracts, plus safety checks are more stringent and carried out more often than a private vehicle would necessitate. Considering that in general, UK drivers are actually having more accidents than ever before, but far fewer fatal ones, it can be seen that the effect of legislation on fleets has had a major impact in helping reduce fatalities on UK roads.
Of course all of this adds up cost wise, and in a bid to reduce this, companies have sought to off load a lot of the running costs and associated administration, by effectively outsourcing their fleets to their drivers. However, although some of the costs for vehicles, servicing etc. may have been partly offloaded, the responsibility the company has towards its employees cannot be avoided. Also, in comparison with company fleet cars, the average age of a grey fleet vehicle is 5 years old, and many are serviced and maintained by local garages, rather than a dedicated dealership for that particular vehicle manufacturer. And as for safety, besides the annual MoT check, who knows how often fluids or tyres are checked by the owner? Although an employee may be using their own vehicle for business use, that responsibility cannot be outsourced. The company they work for still has a duty of care towards them, so even a grey fleet will need some form of management still.
Furthermore, whenever an accident happens that causes a fatality, the Police will always initiate an investigation, which is more than simply checking a driver’s licence details, their MoT, and whether they had proper business car insurance or not, but much more background to the accident, such as the initial state of the vehicle, and the driver’s previous history and experience. This would almost certainly lead to an audit of your driving policies and fleet activity, as that’s where a lot of this information will be available, so even with a grey fleet, the need is still there to show you are legally compliant with current health and safety requirements. And it’s not just fatal accidents that can trigger an audit; there are all sorts of other situations and accidents where it might be necessary to provide your risk management and training records.
However, it’s not all bad news. On the plus side, a lot of health and safety consultancies are now offering advice on fleet management as part of their employers liability insurance packages and business management services and there are also fleet insurance companies offering risk management advice and driving courses, in a bid to keep claims down, which has obvious cost cutting benefits for both them and their customers.
So, should you outsource your fleet? Ultimately it’s down to your own business circumstances, but it certainly pays to be aware of the wider issues and implications, otherwise it could cost you a lot more than you were counting on. As we have seen, running a grey fleet may seem more cost effective upon first glance, but there is much more to it. Outsourcing it’s fleet will not enable a company to outsource it’s responsibilities, and provided it is monitored correctly, running a company owned fleet still has many advantages where much greater transparency, and therefore compliance, lies directly with the control of the business.
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