Company Car Cash Alternatives – Objects in the Mirror May Appear Closer Than They Are

Reward Management 14th February 2014

Over the past 15 years many businesses have given up the Company Car and offered a cash alternative to their staff.  In their eyes, the so called ‘Grey Fleet’ offers a clean and tidy way of absolving themselves of the responsibility of running Company car schemes. But in reality this represents a potentially dangerous strategy.

Let us take the example of Melanie, an ambitious Sales Manager, 30 years old with a young family.  Melanie had always been drawn to prestige German brands and armed with her newly acquired cash allowance to replace the company car scheme, she can just about afford her dream car. For the first few months she loves the image and prestige and all is well until she suffers a couple of punctures. She takes the financial hit but is now facing her first service bill and has already spent £500 more than her cash allowance. With Christmas looming what does she do? She defers the service for a couple months. Christmas passes, and the credit card bill arrives. Co-incidentally Melanie notices the tread on a back tyre is looking low, another cost she decides to defer.

Unfortunately in March Melanie is involved in a serious RTA travelling to a business appointment. Her vehicle has an illegal rear tyre and has not been serviced in accordance with the manufacturer guidelines.  So the question is who was responsible?  Even though she was not driving a company car, unfortunately as Melanie was driving for work, it is the Company’s responsibility and they are potentially facing a corporate manslaughter charge having failed to have taken adequate steps to ensure the vehicle was roadworthy.

Any business offering cash allowances rather than Company cars must ensure that they have processes in place to ensure the following:

  • All drivers have a valid driving licence
  • All drivers possess appropriate insurance to cover business travel
  • Vehicles being used are roadworthy

Have you introduced cash allowances without an adequate risk strategy?

To find out more about protecting your business against the risks associated with running a “grey fleet” rather than a company car fleet, call me on 01604 763494 or fill in the contact form.


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