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Legal Matters:Are you safely steering your employee car policies?

A COMPANY car was once an attractive element of a remuneration package for prospective employees.
However, there are now schemes where employees can finance their own car, thus avoiding company car tax, while the employers pay for business mileage at a pre-determined rate.

The company no longer funds the running costs of company cars nor expends resource on a non-core business function and the employee receives a notional increase in salary from the cash which would have been taken via Benefit in Kind tax on the company car. Employees can put this cash towards their own vehicle by outright purchase, hire purchase, personal contract purchase (PCP) or personal contract hire (PCH) via a lease organisation.

There are pitfalls for employers, however, from these vehicles, the so-called 'grey fleet', arising from responsibilities and duty of care under the Health and Safety at Work Act 1974, the Management of Health and Safety at Work Regulations 1999 and the Corporate Manslaughter and Corporate Homicide Act 2007.

Organisations with five or more employees must have documented, accessible policies with regards to car use for business purposes and also demonstrate employee awareness of and compliance with these policies. Actions, areas and issues to feature in the policies to include:
· Correct insurance, including use for business; copy the certificate, keep on file and update upon policy renewal

· roadworthy vehicles - employers must monitor servicing and maintenance records to ensure that the vehicles are in good working order
· all vehicles must have current MOTs, with copies on file and checked for renewal
· driving licences to be photocopied and checked on six-monthly basis for endorsements
· driver training offered to all who drive for business, whether at the wheel of a company or own vehicle
· log all accidents and look for any trends and then develop solutions to counter them
· raise awareness of changes to regulations, eg use of mobile phones
· impact on reputation and financial implications if the vehicles are too old to comply with the latest emission standards
· safety features, eg airbags, available in newer models, so employees may be more at risk in older vehicles

Steering employees regarding their choice of vehicle may prove challenging. Many will consider, not surprisingly, that they can spend their own money as they see fit. That said, senior management cannot divest themselves of responsibility for those driving non-company cars for business purposes.

Employers must have proportionate policies in place to manage and reduce risk. Failure to do so could see them prosecuted if they are found to have been negligent in their duty of care. Should employers or senior management be in any doubt they should ensure that their policies undergo a thorough MoT.

Fergal Dowling may be contacted on 0870 1500 100
11 August 2008

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