Hybrid fleets help employers provide choice

Offering multiple car schemes can help employers to provide choice and meet the needs of different types of drivers, but how easy is it for organisations to operate such arrangements, asks Nick Golding

Trying to offer a single car arrangement that suits both business-need and perk drivers is nigh on impossible for employers, as there isn’t a one-size-fits-all solution when it comes to providing a fleet.

To get around this, some employers will provide business-need drivers with an economical and presentable company car, and offer perk drivers a cash allowance option so they can either take the cash or purchase their own car. This type of hybrid arrangement enables employers to meet their aims of providing perk drivers with a choice of cars, while knowing that business-need drivers are in suitable cars for their work.

But these arrangements are not without their problems, as they can cause a huge amount of hassle for fleet departments. It is vital that an employer strikes a balance between meeting its own needs, and those of the perk driver, all the while keeping administration levels low. Stuart Menzies, sales director at Grosvenor Contract Leasing, explains: “The obvious downside is you need someone to administer [a hybrid scheme].”

All car schemes come with their own set of complexities, so whether an employer decides to run a leasing-style arrangement, such as a contract hire or personal contract plan, alongside a traditional company car scheme; a traditional company car scheme with a cash allowance option; or all of these types of schemes together, it will need to ensure that it effectively communicates these to employees.

Staff should be given coherent information about how the hybrid scheme operates, its impact on drivers’ tax and pay, and details of the cars that are available for them to select.

Organisations that introduce a hybrid arrangement in place of an existing scheme, meanwhile, may want to limit the number of employees that they offer it to, particularly if it is more generous than what they previously provided. But employers must be prepared to deal with staff that feel aggrieved by the move, for example, if business drivers feel perk drivers are getting a better deal. “If the company says that it is going to give £1,000 a month to one section to buy their own car, but then not make that option available to another section, it clearly has to manage the expectations of those that lose out,” says Menzies.

However, employers that want to run two or more schemes should not be put off by administrative and communication issues. Outsourcing the management and communication of a scheme to a third-party provider can reduce the burden, albeit at a cost.

However, in light of the Corporate Manslaughter and Corporate Homicide Act 2007, which comes into force this month, employers must ensure that they manage the risks involved with any car scheme. Although third-party providers can deal with most issues associated with running an organisation’s fleet, from roadside assistance to vehicle selection, employers must still keep a watchful eye on the safety of the vehicles employees are choosing to drive.

Under the new rules, if drivers in a company-funded car that is subsequently deemed unfit to drive are involved in a fatal accident, employers could be held liable. Steve May, business development manager, SureFleet at the Jelf Group, says: “A [car] is an extension of the workplace, and the employer has a responsibility for the driver, regardless of the type of car scheme.”

Cadbury Schweppes, which operates a hybrid arrangement that includes a cash allowance and a contract hire scheme, has outsourced much of the administration associated with its cash allowance drivers. However, the organisation still finds itself burdened with duties related to these employees because of its obligations to manage the risks around its drivers.

Suzanne Laverick, UK employee benefits manager at Cadbury Schweppes, explains: “It’s not that easy and it does require quite a lot of administration. We ask drivers for documents such as business insurance details, MOT certificates and service history details for us to check. We need to monitor people closely.”

So while it can be tricky for employers to operate a single car scheme that satisfies the needs of all of its workforce, those that opt for a hybrid plan must ensure they can handle the extra administration and demands involved while not neglecting their responsibilities to their drivers.

If you read nothing else read this…

  • Some employers offer multiple car schemes for employees so they can meet their organisation’s business needs and provide a good level of choice for perk drivers.
  • Running two or more schemes can mean extra work for the fleet department, so outsourcing the administration and communication of them to a provider could prove worthwhile.
  • However, the risks associated with running a fleet cannot be outsourced and employers must maintain responsibility for drivers regardless of how many schemes they are operating and how much they outsource.