Whether your business relies on a fleet with hundreds of vehicles or less than ten, a company car policy should be in place before a single vehicle is ever purchased or leased. It’s that important.
A solid company car policy is like a good accounting system: without it, you will inevitably have money trickling down the drain. If you have a decent policy in place, however, you can ensure your fleet runs as safely and efficiently as possible to support your core business needs. When you run a fleet, you need to do so as economically and efficiently as possible, and this will require crafting a fleet policy. A fleet policy will help you keep your fleet efficient because it details the company's and the driver's vehicle responsibilities, enabling the fleet manager to maintain safe and productive fleet operations.
Where to start?
The whole point of a fleet policy is to set guiding principles so there’s a holistic understanding of policies and procedures around the use of company vehicles.
Scope
The policy should clearly state who qualifies for a company vehicle and will apply to all company employees, management, contractors, student interns, volunteers, sponsorship vehicles and any individual delegated with the authority to make use of a company-provided vehicle or services. It will also act as a reference guide for repercussions if a company vehicle is abused or misused.
In addition, it will set out when staff are eligible to use a company vehicle or service.
Start with the basics
Every company car policy should have a clear and comprehensive section outlining vehicle usage. Key points should include:
- Who drives the vehicles?
- For what purpose are they used? For example, pool vehicles can be booked out for specific tasks, but assigned vehicles are allocated to a specific person.
- Specify whether there is a limit on monthly mileage.
- Clarify who is responsible for fuel costs, whether it can be claimed back or if it forms part of the allocated vehicle benefit.
- There should be no confusion over who is responsible for ensuring the vehicle is maintained correctly – who needs to make sure it is serviced on time?
- There should be a clear accident procedure – a step-by-step guide on what to do and whom to contact in the event of an accident.
- Who is liable for traffic fines and details of the process to be followed.
- Details of the tracking system.
A comprehensive fleet policy should clearly define:
- Fiscal management and budget
- Vehicle or equipment assignment
- Out-of-jurisdiction and personal use
- Driver training and behaviour
- Accident and risk management procedures
- Fuel management
- Data management
- Preventative maintenance and repair procedures
- Vehicle use
- Vehicle/equipment specification, procurement, and replacement
- Vehicle/equipment disposal
- Vehicle registration, identification, and marking
- Vehicle idling
It should also include details around:
- Driver responsibilities,
- Vehicle care,
- Company vehicle (fringe benefit) tax,
- Vehicle lifecycle,
- Expectations for use of the company vehicles; and
- Restrictions, such as:
- Transportation of flammable liquids
- Limited idling
- Transportation of hitchhikers
- Window tinting
- Banners and decorations
- Mounting any permanent devices such as ignition interlock devices
- Towing
However, perhaps one of the most important aspects to cover in your fleet policy is what to do in the event of driver neglect.
This needs to detail what exactly constitutes driver neglect and should include aspects such as failure to:
- Keep the vehicle clean, inside and out
- Complete required preventative maintenance
- Comply with manufacturing recall requirements
- Report an accident or incident
- Repair the vehicle in a timely manner
- Properly secure the company vehicle
Companies also need to detail exactly what repercussions there will be for any neglectful behaviour, and detail safety procedures and expectations so there is no doubt about what is required. This will protect the company and drivers by creating a central source of information regarding the safe use of the company vehicle and procedures around:
- Drug and alcohol testing
- How to manage license suspensions
- Processes for reporting and managing accidents
- Insurance cover
- How any telematics solutions work to evaluate the safety of drivers
Policies also need to be routinely updated and communicated, and implementing a fleet policy will require everyone’s support.
When to update your company car policy
Most professional fleet management companies, including EQSTRA Fleet Management, advise that a vehicle policy should be fully revised and updated at least every two years.
A minor revision should be done once a year to account for changes in taxes - specifically to mitigate against ‘bracket creep’ where taxes in upper-income brackets are increased and normal salary inflation causes an employee to move into a higher tax paying bracket and therefore ends up earning less after deductions.
Aside from these regular revisions, there are several triggers that will require a company car policy to be updated to accommodate changes.
These include:
- Change in company strategy that affects the travel policy – for example, when a company moves from a car allowance to a company car system.
- Change in Internal Human Resource Policy – for example, if a company moves from paying traffic fines on behalf of drivers to redirecting traffic fines to drivers.
- If there is a change in job grade or level that affects the employee’s company car benefit.
- Changes in business operations – for example, if a company expands into other countries, but is still using the same vehicles across the border.
- Change in internal procedures and processes – for example, if the procedure for managing accidents or insurance claims is adjusted, the company car policy will need to be updated as well.
- Any changes to labour law that affects company vehicles.
- Any change in the legislature that affects company vehicles.
The above should give you a good idea of how to structure a comprehensive company car policy, but it also makes it very clear that it’s no simple task. Fleet managers need to keep track of a very wide scope of influences from insurance to local, and even cross-border, legislation that can affect the way a fleet needs to be managed.
Steps to take:
- Prepare and research
- Obtain staff support
- Write the policy document in accessible language
- Arrange a legal review
- Proofread the completed document
- Distribute copies and implement
- Provide policy training
The risks of not having a solid company car policy
A comprehensive car policy is every fleet manager’s go-to document for all matters relating to the fleet. It is there to protect the company, the vehicles and employees and ensures there is a strict and clear guideline for everyone involved. The risks of operating without a company car policy are numerous. Below are a few examples that EQSTRA Fleet Management has seen over the years:
- There is no set rule on whether vehicles are allowed outside the borders of South Africa. In this case, a driver might be involved in an accident in an unauthorised area that could potentially nullify access to roadside assistance and other services.
- There is no agreement regarding an accident excess amount, and drivers can refuse to cover this amount if there is no company policy making it their responsibility.
- There is no control over regular driver tests, which can quickly result in persons who are unfit to drive getting behind the wheel of a company car. If there is an accident this can become a nightmare as the company and employee argue over liability. Employees might avoid things such as eye tests in order to keep their jobs and if there is no company policy stating such tests need to be done on a regular basis, the company has nothing to fall back on.
- Unnecessary costs are a huge risk. Without a clear policy around breakdown procedures, employees might use the incorrect supplier, and the company ends up paying a lot more for repairs.
- According to SA legislation, drivers must be made aware that they are being tracked if the company car is equipped with a tracking system. Many companies are not aware of this and it can result in endless legal arguments between companies and employees.
- If your company transports dangerous goods, you need a rock-solid company car policy, as the risk for all parties is much higher. Companies also need to keep track of which goods are classified as high risk, as you can easily be caught off-guard if your business transports a wide variety of cargo.
Every fleet manager, and professional fleet management supplier, will agree that running an effective fleet starts and ends with your company fleet policy. No matter how small your fleet, or what it’s used for, a good company fleet policy will keep things running smoothly and avoid unnecessary delays and costs. No business can afford to operate vehicles without one.