Company cars: How can HR deal with the administration of fleet management?

It may come as a surprise, but more than one-third of all road accidents involve someone driving on business, resulting in more than 1,000 deaths a year. “This puts driving at work alongside high-risk sectors such as construction and quarrying, yet many organisations spend more time carrying out ergonomic assessments for office work­stations than on managing the risks of driving at work,” says John Webb, a consultant at fleet car company Lex Momentum Con­sultancy Services.

In the past, most major employers had a dedicated fleet manager who would handle any risks involved in running a company car scheme. Today, mainly due to cost cutting, these schemes have largely fallen out of favour and HR has, in many cases, been left to manage company cars as part of the wider benefits package.

What many HR professionals fail to recognise, however, are the practical, logistical and – perhaps most importantly of all – legal pitfalls they could be opening themselves up to. These pitfalls exist even where organisations have moved the company car to a ‘cash for car’ scheme, as well as in public sector organisations, points out Webb.

One of the biggest potential risks is falling foul of the upcoming corporate manslaughter legislation. The draft Corporate Manslaughter and Culpable Homicide Bill is due to be enacted either in October this year or April 2008. Until now, the Health and Safety Executive and police have had great difficulty in prosecuting road deaths, even where employers were deemed to be at fault. The new legislation, however, will make more prosecutions of employers a reality.

Fiona Hahlo, a personal injury lawyer at Reynolds Porter Chamberlain, says it is important not to over-exaggerate the effects of the Bill since a prosecution – for which the penalty is an unlimited fine – would only result from an extreme case of gross negligence.

But there are scenarios where it could happen, she says. “If an employee was asked to drive from London to Manchester and back again within an unrealistic timeframe, and no risk assessment had been done to check this was reasonable – and this resulted in a road death – that could be found to constitute gross negligence,” she explains. Another scenario might be if a vehicle had faulty brakes and no attempt had been made to fix them.

Even where an employer did not end up being prosecuted, Hahlo believes the stigma could be enormously damaging. “Corporate manslaughter is more high-profile than a breach of health and safety rules, so there is greater potential for adverse publicity, which is something no company wants,” she says.

David Leckie, a partner at law firm Maclay Murray & Spens, agrees: “The investigation alone would involve people being interviewed under caution and police crawling all over your documents and your offices. This creates very bad publicity and is not good news for companies.”

Even under current legislation – notably the Health and Safety at Work Act 1974 and the Management of Health and Safety at Work Regulations 1999 – companies have a legal responsibility, a duty of care, when managing company cars. If a company has more than five employees, there needs to be a clear policy (see below).

Even providing a lease allowance for staff to choose their own cars doesn’t mean you’re outside the legislation. “You can’t just hand out the cash and think there is no comeback,” says Simon Naylor, marketing director at Wessex Fleet Solutions.

Consequently, many employers now choose to outsource their fleet management to third parties. The benefit of this, they argue, is that they can provide a ‘one-stop shop’ for all employee and vehicle issues.

But even then, drawing up the policy, carrying out the risk assessment and updating both regularly are still the job of the employer. Jim Salked, managing director of fleet management firm Opticar, explains: “The company owns the problems. All we can do is manage their policy, although we can help with recommendations of best practice because we know what issues are involved.”

Opticar recommends to its clients that drivers are given a licence check and an online driving assessment so an employer can see which drivers may need more help. Fleet management companies can also handle issues such as insurance and mileage records. In many organisations, however, the management of company cars can fall between several departments (usually HR, finance or procurement) – and that means there is an increased risk of issues being missed.

Peter Eldridge, a director and secretary of the Institute of Car Fleet Management (ICFM), believes this is a key concern. “We know there are people out there who need to learn about issues such as the legal aspects of fleet operation, and there needs to be someone who is professionally competent in such areas,” he says. The ICFM runs courses on managing company car fleets.

Another danger occurs when policies are cut and pasted, he argues. “One fleet is very different from another. For example, if there are high-performance vehicles involved or if the car is used by family and friends of the employee, it can get very complicated. All the issues need to be thought through very thoroughly,” he adds.

Ultimately, the company car scheme needs to be treated as one of the organisation’s biggest assets. “It’s often the second biggest expenditure after pensions, so if HR isn’t close to the scheme, it should be,” says Paul Roberts, director at Lex Momentum.

There are some, including Stuart White, a director and membership secretary at ACFO (a UK representative body for fleet operators), who believe the legal risks implied by the Corporate Manslaughter Bill are being overstated. “I cannot imagine a scenario when a fleet manager is going to be charged under this offence. Anyone who says they can hasn’t read the draft,” he insists.

He may be right, but if your organisation ends up as a test case, the consequences in terms of both cost and corporate reputation could be immense. With this in mind, driving for business is an issue that needs to move fast up the HR agenda.

What to look out for

In 2003, the Health and Safety Executive published its Driving at Work guidelines, which clearly set out how employers must conduct suitable risk assessments.

It outlines how organisations can put in place measures to ensure that work-related journeys are safe staff are fit and are competent to drive safely and the vehicles are fit for purpose and in a safe condition.

Among the large number of issues that need to be addressed are:

  • Have alternatives such as air or train travel been considered instead of expecting employees to drive long distances?
  • Are the deadlines that employees are given to drive long distances reasonable?
  • Are all employees’ driving licences checked on a regular basis and have you seen the original documents?
  • Is the policy clear about whether the car can be driven for personal use?
  • Is it clear who else is allowed to drive the car and whether they need to be checked?
  • How do you ensure that a driver’s eyesight is good enough for driving safely?
  • Have you checked whether any employees are on medication that could affect their driving?
  • Are drivers clear about the law when it comes to drinking alcohol?
  • Are they clear about the use of mobile phones?
  • Is the vehicle fit for purpose?
  • Is it checked regularly enough?
  • Do employees know who to contact if anything goes wrong with the vehicle?

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