Your guide to cutting costs and risk from your grey fleet

Grey fleet is the phrase used to describe vehicles used by employees on work journeys – from popping to the post office to attending off-site meetings - which are not owned or leased by their employer.

These vehicles may be privately-owned, bought using cash allowances or vehicles rented privately by the employee.

Allowing their use provides a high level of convenience and flexibility, and is an essential part of the operations of many smaller businesses.

It can also be provide significant cost savings, particularly for smaller businesses with relatively low travel requirements, because the AMAP rate for reimbursing employees with 45p per mile can often be significantly cheaper than owning and operating a small vehicle fleet.

Obviously, the greater a business’s travel requirements, the higher the cost of grey fleet expense requirements will be, and in combination with the additional risk of an incident due to increased total travel distance, the cost of relying grey fleet vehicles could be much higher.

This is why some organisations set a limit on the number of grey fleet miles an employee can do before they are moved into a company vehicle.

For example, if a driver does more than 10,000 business miles a year, they become eligible for a company car. Anything below that, they are able to use their own vehicle for work trips.

Other organisations pay the 45ppm AMAP rate for a set amount of miles, maybe 8,000 for example, and then a reduced reimbursement rate after that.

However, as well as cost, organisations need to be aware of their health and safety responsibilities regarding drivers using grey fleet vehicles.

Under the Health and Safety at Work Act (1974) and the Management of Health and Safety at Work Regulations (1999), “it shall be the duty of every employer to ensure, so far is reasonably practicable, the health, safety and welfare at work of all employees”.

With regards to grey fleet, this means if a vehicle is being used to travel for businesses, regardless of who it is owned by, the employer is responsible for ensuring that it is fit for purpose, adequately maintained and that it can be safely driven.

If an employee is involved in an incident while driving for work, their employee could be liable for any damage or injuries that occur.

In a worst-case scenario, under the Corporate Manslaughter Act 2007, they could be prosecuted if someone dies in a collision involving their employee using their own vehicle for work purposes.

Many organisations treat their grey fleet the same as their company vehicles when it comes to risk and compliance, and this also includes providing driver training to them.

Restrictions are often placed what vehicles can be used as ‘grey fleet’. Road safety charity Brake recommends fleet decision-makers stipulate minimum Euro NCAP safety ratings, vehicle age, emission levels, required safety features and essential breakdown cover.

At the bare minimum, employers should check that:

• The vehicle has a valid MOT certificate
• The vehicle is roadworthy and has been appropriately maintained as outlined in its service book
• The driver has the appropriate licence for the class of vehicle
• The driver does not have vision, health or other impairment issues that would affect their ability to safely operate the vehicle.
• Driver and vehicle have valid insurance that includes business journeys.
• Vehicle has up to date road tax.

Ensuring drivers provide all of the necessary information can be difficult for some fleet decision-makers, as drivers can be reluctant to pass on the information or just forget to.

One technique many to overcome this and is employed by many fleet decision-makers is to withhold an employee’s mileage reimbursement unless all requested information is supplied.

A formal grey fleet policy will help to reinforce company car expectations and individual driving for work responsibilities.

This should detail everything from overarching corporate objectives to employees’ code of conduct.

An accompanying driver safety handbook is also recommended to provide advice on everything from driving in adverse weather to dealing with fatigue.

Once formulated, the policy should be communicated to employees at all levels.

In some cases, crucial safe driving advice may receive better engagement in digestible formats such as short videos, animations or pictorial guides.

Grey fleet alternatives

As well as company vehicles, there are alternatives to grey fleet an organisation can use.

Brake recommends that employees should avoid unnecessary travel and use video calls if possible.

If travel is essential, then more sustainable modes of transport such as pool cars, car clubs  and daily rental can offer a cleaner and more cost-effective mode of travel than an employee using their own car.

Car clubs are one of the most recent developments and they have seen their popularity among organisations grow significantly in recent years.

In essence, they are a form of short-term vehicle rental, but one which offers access to cars for as long as the user needs them, whether that is for 30 minutes or a day or more.

Typically, they are booked either through a web portal or smartphone app, with registered users able to check vehicle availability immediately. After booking they can unlock the cars with a smartcard.

There are three main operating models: back-to-bay, which is the most common form and sees cars returned to their own designated parking place; back-to-area where the car must be returned to a small, designated area, usually a street or two; and the newer one-way/flex model, where a car can be taken on a one-way trip and parked on-street wherever it is legal to do so.

It is becoming increasingly common for organis­ations to partner with car club operators to allow them to have vehicles – usually based at their own premises – available for their sole use, as well as using the supplier’s technologies and back-office support.

One example of this is Highland Council, which carried out a full review of its grey fleet in 2018 and found it accounted for 82% of its travel costs in the 2016/17 financial year, with more than six million miles claimed for through expenses.

This meant its annual grey fleet bill was then nearly £3m. After introducing between 50 and 60 car club vehicles spread around 20 council sites, the grey fleet bill had fallen to £1.15m in the 2021/22 financial year.