While salary sacrifice schemes are often seen as a way to benefit employees and businesses alike, there’s a hidden danger lurking: turning your company’s fleet into a grey fleet. This subtle shift can leave fleet managers scrambling to manage both company-owned and grey vehicles, which can complicate compliance, safety, and costs. So, how can you manage this mix effectively, and what responsibilities should fleet managers be prepared for?
What is a Grey Fleet?
A grey fleet refers to vehicles that are owned by employees but used for business purposes. They don’t belong to the company, but they are used for work-related tasks, like business trips, deliveries, or client visits. Traditionally, companies would offer employee vehicles as part of a company car scheme, but with the rise of salary sacrifice, more employees are opting to lease or purchase their own vehicles under the scheme, potentially turning their personal vehicles into part of the company fleet.
How Can Salary Sacrifice Lead to a Grey Fleet?
Salary sacrifice schemes allow employees to swap part of their salary for a range of non-cash benefits, including cars. While this may seem like a good option, it could inadvertently create a grey fleet. This happens when employees opt for a vehicle as part of the scheme, but the vehicle remains registered in the employee’s name. Consequently, the company doesn’t own the vehicle, but it’s still used for business purposes, adding complexity for the fleet manager.
Can You Manage a Company-Owned Fleet and a Grey Fleet?
It’s Possible, But It’s Complicated
Managing a mix of company-owned vehicles and grey fleet vehicles is possible, but it introduces several challenges. You must be prepared to address various issues that come with managing both types of vehicles.
- Compliance and Safety
For company-owned fleets, compliance is straightforward: the employer has full control over maintenance, insurance, and driver behaviour. However, with a grey fleet, things get murky. Employees are responsible for the upkeep of their vehicles, but fleet managers still need to ensure that grey fleet vehicles meet safety and insurance standards. This can mean additional administrative work, ensuring that all grey fleet vehicles are appropriately insured, taxed, and have up-to-date MOTs. - Servicing and Tyres for Grey Fleet Vehicles
One of the key challenges of managing a grey fleet is determining whether to offer services like maintenance, servicing, and tyre replacement for grey fleet vehicles. While it’s feasible to provide these services for company-owned vehicles, extending them to grey fleet vehicles could open up a host of legal and logistical issues. For instance, would you be liable for repairs on a vehicle not owned by the company? Could you negotiate a discount with garages on behalf of employees, or would employees need to pay directly? - Cost Management and Control
With a grey fleet, there’s less control over vehicle costs, including fuel, servicing, and repairs. Fleet managers may find it difficult to ensure that employees are maintaining their vehicles to company standards, leading to potential safety risks or higher costs for the business. Salary sacrifice schemes that include vehicles may also result in unforeseen expenses, as employees might be incentivised to opt for higher-specification models that increase fuel costs and maintenance demands.
What Issues Will a Fleet Manager Need to Be Responsible For?
Managing both a company-owned fleet and a grey fleet will require a fleet manager to take on new responsibilities:
- Ensuring Vehicle Compliance
Fleet managers will need to track the legal compliance of both company-owned and grey fleet vehicles. This includes checking MOTs, ensuring vehicles are taxed and insured, and verifying that maintenance schedules are being followed. - Monitoring Safety Standards
It’s crucial to ensure that grey fleet vehicles are maintained to the same safety standards as company vehicles. This might involve creating a policy that requires employees to submit regular safety checks, or offering voluntary inspections at a discounted rate through the company’s servicing network. - Managing Costs
Fleet managers must keep a close eye on the costs associated with both types of vehicles. This includes monitoring fuel usage, maintenance costs, and insurance premiums. It may also involve offering cost-saving initiatives, such as discounted servicing or tyre replacement deals, to encourage employees to maintain their grey fleet vehicles in line with company standards. - Tracking Vehicle Usage and Insurance
For a grey fleet, it’s essential to monitor how frequently the vehicles are used for business purposes. You’ll also need to ensure that these vehicles are adequately insured for business use, which is often an additional cost not covered by standard personal car insurance.
Can a Salary Sacrifice Scheme Work for Your Business?
The rise of salary sacrifice schemes can provide benefits to employees and organisations, but it’s important to understand the risks. If managed poorly, you may find yourself with a growing grey fleet, which comes with its own set of challenges. Fleet managers must have systems in place to track the compliance, safety, and maintenance of these vehicles, as well as manage costs and insurance.
To make the mix of company-owned and grey fleet vehicles work, fleet managers must be proactive in creating clear policies and processes. Offering services like servicing and tyre replacements for grey fleet vehicles could be part of your solution, but only if it’s carefully planned out and legally viable.