When companies opt for cash-for-cars schemes they cut down on administration; in some cases, so much so that they lay off their fleet managers. After all, employees become responsible for insurance, servicing and ensuring that tyres are in good nick. The employer has only to provide the funds so staff can buy the type of car they are entitled to.
However, under the new corporate killing legislation employers are responsible for staff cars used on business, regardless who purchased them. A car is viewed as an extension of the office and, as such, its conditions of use are the responsibility of the employer. And compliance is labour-intensive and costly.
Not only are fleet car drivers affected, but so is anyone who may be affected by their actions. A prosecution resulting from an accident that occurred in May 2004 illustrates this point. Two vehicles collided, killing one of the drivers. Mud deposited on the road by vehicles leaving a construction site was a contributory factor. The Health and Safety Executive prosecuted four construction companies, which were fined collectively £37,000 for failure to clear that mud.
“We have not seen anyone prosecuted for corporate manslaughter, but it will become commonplace,” says John Pout, head of strategic business development for Arval PHH. Companies can outsource the administration of a fleet, but they need proper disciplines within a contract of employment. Legal responsibility rests with the employer.
“The cash route is not purely a financial exercise,” says Pout. “It is another method of fleet management and needs to be considered from a broader employer’s and employee’s point of view.”
According to John Given, sales director of LloydsTSB Autolease: “Many companies are starting to look at the benefits of employees owning their vehicle through a credit sale agreement. That way cars are operated as a fleet and the employer has control.”
Having laid off fleet managers, some organisations are now realising they need the expertise internally and are employing an in-house manager or consultant. “They are demanding a lot of us,” says Given.
Equipping drivers with a handbook that offers guidelines on the use of mobile phones, the number of hours they should drive, etc, is a starting point. Given believes companies should check licences to ensure employees are driving legally, with safe tyres and a valid MOT. “The day the MOT runs out is the day insurance become invalid,” says Given. “We have used text messages to remind people, telling them not to drive their car unless they have a valid MOT, and also ask them to send us a copy.”
Zenith intends to make it more difficult for clients to take cash allowances. “We are not saying everyone is going to move out of cash schemes,” says chief executive Andrew Cope. “But vehicles bought on a cash allowance should be part of the fleet so that when companies monitor the cost of company cars they run a similar policy for cash allowance cars.”
Companies cannot hand over responsibility for company cars with cash-for-car packages. And although applying similarly rigorous rules for cash cars as for fleet vehicles may prove expensive, it will be a matter of self preservation. A small price to pay.
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