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- A clear definition of what travel means for the business is needed before implementing a policy.
- Company cars remain the most popular travel benefit.
- Duty of care and awareness of legalities should be included.
- But employers must be careful about who they benchmark against.
When employers are putting together a staff travel policy, there are a number of issues that could impact decisions around what to include and what not to include.
These include cost management, risk management, carbon footprint reduction, business efficiency and effectiveness and time management, says John Pryor, chairman of industry body ACFO (see column).
But before a policy is put together, employers need to clearly define what travel means for the business.
Sue Robinson, a partner in the human capital team at EY, says: “There needs to be clarity [around] what types of travel should be included and there could be separate policies for cars, bikes, trains and aircraft. The policy should be comprehensive and have clear definitions of what the organisation will pay for and the expectation of what staff have to do to qualify.”
Company car schemes
One of the more common travel benefits to include in such a policy is a company car scheme. Alongside traditional company car and leasing arrangements, options to consider include car hire, the use of employees’ own cars and pool cars. Salary sacrifice car schemes are also popular.
Which option employers choose will depend on business and workforce needs, but overall simplicity is key. Employers could also operate a blended approach that combines more than one option.
Jon Burdekin, head of consultancy services at Alphabet, says: “The objective is not to assign one car to one person, but employers should offer a blended approach to help get more efficiencies for the business. It is about making a travel policy appropriate to the workforce.”
When choosing which type of car scheme is right for an organisation, the journey and what they will typically be used for should be the most important considerations. For example, in some organisations electric cars might be more suitable for a journey, while in others a pool car scheme may help to mitigate costs, adds Burdekin.
Travel policies can also evolve over time. West Middlesex University Hospital, for example, saved more than £38,000 by launching a pool car scheme after previously spending that amount on taxi fares.
Responsibilities and liabilities
But any car strategy should be clear and cover in detail drivers’ responsibilities and liabilities. This could include driving standards, information on licence checks, procedures for dealing with fines, fixed penalties and offences, a no-smoking policy, scheme eligibility, insurance and permitted use.
Ian Hughes, commercial director at Zenith, says: “Responsibilities for maintaining cars should also be included. But also information on what to do in the event of an accident, rules on taking cars overseas, use of hire cars and health and safety guidance. A well-written policy will help towards covering employer’s duty-of-care responsibilities, improving driver safety and also preventing disputes with drivers regarding condition and use of the car.”
This is key to ensuring employees are aware of their role and responsibilities around cars. For example, research by fleet tracking provider Abax, published in April, found that 56% of employees who drive a car for business purposes are unaware of the tax regime for reclaiming business mileage.
Organisations also have a duty to report company car schemes to HM Revenue and Customs (HMRC), particularly if cars are used for personal trips.
Duty of care
Ensuring they are fully aware of and informed about legal issues is crucial for employers and HR or benefits professionals with fleet responsibilities to ensure accurate records are kept and to avoid potential penalties.
To help with driver safety, employers could offer driver eyecare and sight tests, either on a core basis or offered as a flexible or voluntary benefit. Skanska, for example, holds driver roadshows, provided by Specsavers Corporate Eyecare, in a bid to increase road safety knowledge relating to driver eyesight among its employees.
Car parking benefits
One growing benefit in a staff travel policy is car parking offered via a salary sacrifice arrangement. This can help employers and staff to overcome the issues of the cost and availability of car parking for employees.
The scheme enables employees to save up to 42% annually on car parking at or near to employees’ work by paying for parking over a 12-month period, out of their gross salary.
According to figures from P&MM Employee Benefits, the use of car parking season tickets are increasing year on year by up to 30%. It is especially effective as a way of helping employees to reduce the cost of parking in public areas.
Inclusion of bikes for work
Employers that are seeking to reduce the pressure on workplace parking or are based in areas such as central London, where driving to work is not always a viable option, could incentivise the use of public transport, or encourage car pooling and cycling to work.
One of the main attractions for offering a bikes-for-work scheme as part of a travel policy is the tax and national insurance (NI) breaks it offers employees and employers.
Employees can reduce their tax and NI liability when they buy a bike through a salary sacrifice arrangement. The typical saving for a standard-rate taxpayer is 32%, rising to 42% for higher-rate taxpayers.
Where employees may previously have travelled by car, their related expenses may be further reduced when the cost of running a car, including fuel, insurance and congestion charges, is taken into account.
Employers can save, on average, 13.8% of the total value of the salary employees sacrifice because of the consequent reduction in employer NI contributions.
Martin Rover-Parkes, product manager at Edenred, says: “If a travel policy’s goal is to reduce the employer’s carbon footprint, then a lot of investment and time should be put into a bikes-for-work scheme. A lot of investment has also been put into it from government and it will continue to be used as an effective mode of transport as part of an employer’s strategy.”
Public transport and expenses
Where employers cover an employee’s public transport costs, this too can bring certain tax, NI and reporting obligations.
Public transport costs include: season tickets provided for employees;season ticket costs reimbursed to employees; loans made to employees to buy season tickets; and contributions to subsidised or free public bus transport.
Employers do not have to report anything to HMRC if they subsidise or offer free public bus transport. They also do not have to pay any tax or NI on these costs.
A case in point would involve an employer helping to finance a bus route that gives an employee free or discounted transport between their homes and work or between workplaces.
Organisations could also subsidise the cost using a tax-free loan scheme. Employers can offer loans that do not exceed £10,000 to an individual employee at any one time. This can then be used against annual season ticket loans.
When employees are expected to travel for work, their expenses are often covered by the organisation. The processes for approving expenses, the reimbursement amounts and guidelines for claiming expenses vary from organisation to organisation. Having a clear employee expenses policy in place, therefore, will help approvers and claimants determine reasonable and appropriate travel expenses.
Aircraft
Employers with global business might want to think about including aircraft travel within a policy so that employees can claim expenses back on travelling for business.
Set rules could be introduced such as purchasing a ticket in economy class for flights under six hours and allowing business class travel for flights over and above the hours set for an economy ticket. This could save the organisation unnecessary costs.
Restrictions could also be put in place to prevent a number of employees travelling on the same aircraft for safety issues.
“If there were exceptions in something like this, employees could take advantage and claim expenses where they do not need to,” says Robinson. “It is important as a responsible employer to include what can and cannot be used. It is about having a comprehensive enough cover to showcase the benefits but also the safety and compliance purposes behind staff travel.”
Benchmarking
However, despite the many benefits that can be included within a staff travel policy, a question often remains for employers about what to benchmark such policies against.
John Harding, pay, performance and risk partner at PricewaterhouseCoopers, says: “The difficulty comes when an employer has to benchmark travel policies. If a business has regions out of London, [does it] benchmark against London firms or those around each individual business area?”
Neal Francis, divisional marketing director at Pendragon Vehicle Management, adds: “Travel policies should be succinct enough to encourage employees to read and completely understand the policy. Organisations should take time to research the best processes that offer clear authorisation.
Axa Group includes a range of benefits for staff travel
Axa includes a range of benefits within its staff travel policy.
The insurer has a comprehensive company car policy, which offers all its employees the opportunity to have a company car, using three funding methods: employee car ownership, contract hire and a salary sacrifice arrangement.
It also offers a number of other travel-related benefits such as a cash allowance towards the cost of a car for those that need one for work purposes, season ticket loans towards train travel and a bikes-for-work scheme.
Nadeen Jackson-Barker, reward manager at Axa, says: “It is a comprehensive policy that is about helping employees travel to work and travel on business.
“An integral part of the policy, where possible, is to encourage employees to use different methods of travel to help cut the organisation’s carbon footprint.”
Axa’s policy also offers support and guidance on safe driving for work, which includes journey planning. It updates this regularly.
It also carries out annual driving licence checks and produces newsletters to highlight any changes in policies or government legislation.
“The booklet is there to educate employees,” says Jackson-Barker. “There is a need, as a good employer, to make sure people are safe when travelling.
“It is part of our policy to communicate effectively because it could go unnoticed, for example that you need to carry a breathalyser in the car if you are travelling in France.
“Our staff travel policy offers the benefits that are necessary but also guidance. The policy is primarily built around safety, and the next issue [to consider] is the cost savings behind offering employees appropriate benefits.”
Viewpoint: A multi-diverse mobility plan has never been greater
The opportunity for employers to implement a diverse, multi-faceted, sustainable mobility plan and display corporate social responsibility has never been greater.
Cost management, risk management, carbon footprint reduction, business efficiency and effectiveness and time management are all issues that impact on corporate travel.
Too frequently, many employers retain the status quo and simply accept that employees have a company car, will access a pool car or drive their own car and reclaim mileage. But is that the best travel solution, both for the business and the individual?
Frequently, the answer may well be no. Employers and employees have never had the business travel choice that is available today.
The internet enables searches and price/time comparisons to be undertaken almost instantly. It means the travel options are almost limitless: train, plane, car share, car club and daily rental as well as bus, motorbike, taxi, cycle and walking, not to mention the company car, pool car or own car.
Therefore, just as when compiling company car choice lists, fleet decision makers should focus on the total cost of ownership of the car during the operating lifecycle, so the factors that should be taken into account in establishing a staff travel policy should include: the number of people travelling; length of journey, costs, for example peak versus off-peak fares; hire car, car club or taxi; if driving the cost of fuel and parking; time constraints; ease of travel; and the actual travel distance, in terms of the start to end location and return trip.
Thus, it is the total cost of the journey that is critical while also taking into account a myriad of broader factors, notably risk, the environment, efficiency and time. The car may not always be the optimum solution.
It is also critical to fully communicate the travel policy to staff. It is essential that policies and procedures are joined up and clearly understood and the options are taken into account by employees when they make their travel-related decisions.
Business mobility is a balancing act with no right answers and many variables that all have to be considered and managed.
John Pryor is chairman of industry body ACFO
