Administering contract hire schemes

Putting a fleet out to contract hire is popular because the chosen leasing firm takes on the day-to-day administration and contact issues with employees, but be sure to have policy input, says Nick Golding

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A contract hire scheme is where a company hires a car from a leasing company for a set period of time for an agreed monthly cost.

Employers must play an active role in fleet management by communicating their health and safety policy to drivers and taking responsibility for duty-of-care issues, as ultimately it will be held liable in the event of an employee injury in a car that is not fit for purpose.

While the leasing company can deal with day-to-day administrative tasks, such as sending out tax discs and taking breakdown calls, it cannot take on full responsibility for drivers.

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Contract hire schemes are often thought to remove the responsibility of running an organisation’s fleet from an employer. With the chosen leasing company taking over the day-to-day running and administrative burden, such schemes may seem like the perfect option for fleet managers that want to supply and fund a company car scheme, but ultimately do not want to take on the full weight of the work involved.

According to the Employee Benefits Fleet research 2007 this is the most popular option among UK employers, with over half (51%) of respondents favouring contract hire as a method of outsourcing.

Spencer King, marketing manager at Leaseplan, explains: "The biggest area we can help them with is the removal of the day-to-day dialogue with employees, so instead of a driver phoning a fleet manager and saying ‘where the hell is my tax disc?’, they can call us."

While this task may not be too much of a burden for a small employer with relatively few cars in its fleet, administering a car scheme for larger organisations is another matter, particularly when the fleet manager’s role involves more than just attending to company cars.

But contract hire schemes will not remove all work from employers. In reality, there is still plenty they must take responsibility for, particularly around communication and duty-of-care issues. This is something that not all employers which take on a contract hire scheme are willing to accept.

Karen Zaremba, group customer services manager at ALD Automotive, explains: "Most are quite aware of what’s required of them on an ongoing basis, but there are others who are more laid back about their responsibilities and these are the ones that we need to sit down and talk with."

A key role for employers after putting a contract hire scheme in place, is to act as a guardian for drivers where health and safety is concerned. Should employees be involved in an accident where someone is injured, the organisation could be investigated by the police, who will want to see evidence of the employer’s health and safety policy for drivers.

To ensure they are covered, the company must draw up a safety policy and communicate it to staff. While utilising their leasing firm to an extent is acceptable, off-loading the task altogether is not. "We can help employers communicate, and they can use our knowledge and experience, but it ultimately lies with the employer," confirms King.

Drinks manufacturer Coors Brewers, which has a fleet of around 1,000 vehicles in a contract hire scheme, acknowledges that it needs to maintain a certain amount of communication with drivers, especially when it comes to health and safety risks.

Keith Abell, HR contracts manager, explains: "On a day-to-day basis, the driver contact is dealt with by the leasing firm but we own the company car policy which is communicated internally."

Vehicle choice is another potentially hazardous area, so ensuring that employees drive a car that is fit for purpose is another responsibility that employers cannot afford to abandon when involved in a contract hire scheme.

Relying on the leasing company to dish out vehicles to company drivers, when they do not have details on the jobs these drivers must perform and the miles they need to drive can be a recipe for disaster.

To stay on top of this, employers must work closely with their leasing company, and keep a close eye on the cars that are being offered to staff. This is the course of action selected by Coors Brewers. "We determine the manufacturers available on the selection list, the driver can select a vehicle dependant on the lease allowance set for their specific grading at the time," explains Abell.