New legal requirements on fleet

New legal requirements on mobile phones, smoking, driving hours and corporate manslaughter mean fleet managers have their work cut out, says Vicki Taylor

Over the past few years, a seemingly relentless stream of changing legislation and regulations has posed a challenge for fleet managers to keep tabs on.

One of the biggest issues currently likely to be front of mind is the introduction of the Smoke-Free (Exemptions and Vehicles) Regulations, which affect all enclosed workspaces, including vehicles used in the course of work by more than one person. Having already come into force in Wales, Northern Ireland and Scotland, the regulations are due to take effect in England from 1 July.

However, this piece of legislation is not the only thing on fleet managers’ minds. Many will also be considering whether to change their mobile phone policies after tougher new penalties were introduced in February under the Road Safety Act 2006. On top of this, the case of Eyres v Atkinsons Kitchens and Bathrooms, in which a company was found liable for causing a road accident by forcing an employee to drive for long periods, will have refocused fleet managers’ attention on driving hours and the need for staff to take suitable breaks.

The ongoing government review of employee car ownership plans (Ecops) and approved mileage rates (Amaps), plus the long-awaited Corporate Manslaughter and Homicide Bill, leaves further uncertainty.

Fleets with van drivers will also be grappling with monitoring private use for accounting purposes after new rules came into force in April exempting employees from paying tax on company vans providing they are mainly used for business purposes. Graham Rees, managing director of vehicle consultancy Fleetworx, says: “Although the driver is the one who is responsible for declaring and paying [HM Revenue & Customs], the employer has to reflect what the driver is declaring in P11D terms, and ensure they have trip and mileage records so [they can show] the driver is not using it for private purposes and any miles declared are actually business miles.”

But despite the numerous changes, many in the industry believe it is the smoke-free regulations that are causing fleet managers the most sleepless nights due to the number of unanswered questions surrounding the legislation. Stewart Whyte, a director and membership secretary at ACFO, says: “As far as we are concerned, [the legislation] was drafted by someone who doesn’t know there is a company car market.”

Under the regulations, a vehicle must be smoke-free if it is used in the course of paid or voluntary work by more than one person, even if each one uses the car at different times. The regulations do not apply to vehicles used in the course of work if they are primarily used for private purposes by a person who owns the car or has a right to use it which is not restricted to a particular journey.

Anyone with management responsibilities for cars that fall under the legislation also has a duty to ensure no-smoking signs are put on display within each of the vehicles. These must be at least 70mm in diameter in England and 75mm in Wales.

If organisations fail to comply with the rules, both the driver and their employer are at risk of incurring penalty fines. Failing to display a no-smoking sign, for example, attracts a fine of £200 or £150 if paid promptly. Failure to pay, or if the matter is contested in court and the person is found guilty, attracts a fine up to £1,000. The fixed penalty for smoking in a smoke-free place is £50, with a discounted amount for prompt payment of £30. A manager or company that fails to prevent smoking in a smoke-free vehicle will incur no fixed fine, but a court can award a penalty of up to £2,500.

Although the regulations may initially seem quite straightforward, Whyte explains many fleet managers have concerns over issues such as whether they can reallocate vehicles used by a smoker to a non-smoker. “It is by no means an unknown situation and yet the legislation has no guidance. If the legislation means that someone can turn around and legitimately refuse to take a car, the costs for fleet operators in being forced into early terminations are horrendous.”

With such questions still outstanding and the introduction of the legislation just around the corner, it seems likely fleet managers will have to wait until the law beds in for further guidance.

Rees believes that mobile phones present a more pressing concern for some of his clients. In February, the fine for drivers caught using hand-held phones increased from £30 to £60 and three penalty points. The rules now also give the same treatment to the offence of ‘not being in proper control of a vehicle’ and can apply even where a driver is using a hands-free kit to take calls.

While Rees says none of his clients have banned hands-free kits yet, Paul Jackson, managing director of the Miles Consultancy, has several that have taken this route. “A few have started to say ‘you can’t use your mobiles in the car’ but anyone with sales people would be stupid [from a business perspective] to do that. [They] do so many miles that [they] have to use their phone at some point,” he says.

Another bone of contention, particularly for employers thinking of implementing or reviewing an Ecop is the ongoing government review into these and Amaps, originally announced in the Budget 2006. HM Revenue & Customs’ (HMRC) subsequent investigation found that Ecops are closely entwined with Amaps which allow employees driving their own cars on business to claim 40p a mile for the first 10,000 miles and then 25p per mile thereafter, free of tax and national insurance (NI) contributions. HMRC believes that Ecop drivers typically opt for higher CO2-emitting vehicles than traditional company car drivers and the advantageous tax situation encourages these drivers to do more miles.

The background material accompanying this year’s Budget statement, delivered in March, stated that the government is considering aligning the tax and NI treatment of Amaps and setting the thresholds at a level to promote environmentally-friendly travel. An announcement on the government’s intended action is expected before the next pre-Budget report, due at the end of the year.

Last month, HMRC published an open letter setting out three possible changes that could be made to Amaps. These include linking Amaps to CO2 emissions, amending the rates and thresholds or a combination of these two solutions. The proposals will remain open for consultation until 31 July.

Gary Hull, director, employee solutions at PricewaterhouseCoopers, says: “Fleets are looking at what-if scenarios if the changes that are mooted come into place.”

If employers have to offer more lower CO2-emitting cars as a result of the government’s decision, they may have to reimburse staff for any less favourable treatment they receive if their existing car is part-way through a lease and becomes eligible for lower reimbursement rates through Amaps due to its high CO2 emissions. “Those businesses may be faced with giving the employees some sort of compensation for the loss that they [incur], which might be through providing them with additional remuneration,” adds Hull.

Another piece of legislation fleet managers are awaiting with baited breath is the proposed Corporate Manslaughter and Homicide Bill, which will hold companies responsible for the deaths of employees or members of the public if it can be shown these could have been avoided. The Bill, which has been mooted for some time, originally proposed that individual managers and directors should be imprisoned if the corporate manslaughter occurred as a result of their individual failings, but this is no longer the case.

At the time of going to press, the House of Commons had accepted the House of Lords’ amendments but not vice versa. If agreement is not reached by the end of July, the Bill will need to start all over again. But its prospects, while uncertain, do look hopeful. Michael Duncan, a spokesperson for the Ministry of Justice, says: “The Bill is well advanced. It’s in its final stage.”

ACFO’s Whyte believes the Bill, if it does come into effect, will have little bearing on fleet managers providing they ensure their policies relating to fleet, such as driving hours and maintenance schedules, are robust and clearly communicated.

“We have been living under the shadow of a corporate manslaughter bill for some time now. It is my understanding that [it] will have very little relevance. But we, as a fleet community, are becoming increasingly frustrated and concerned about the uncertainty. If we are going to have a corporate manslaughter bill, lets get it out and fleet operators can then cut their cloth,” adds Whyte.

Legislation checklist

Smoke-Free Regulations
The parts that concern fleet managers are:†
• Smoke-free (Exemptions and Vehicles) Regulations
• Smoke-free (Signs) Regulations
• Smoke-free (Vehicle Operators and Penalty Notices) Regulations.

Employee car ownership/Authorised mileage allowance payments review
The conclusion of this on-going review is expected to be announced in the next pre-Budget report, due at the end of the year. Comments on HMRC proposals published last month can be made until 31 July.

Corporate Manslaughter and Homicide Bill
This proposed Bill would charge companies with corporate manslaughter if they are believed to be liable for failings leading to an employee’s or member of the public’s death. At the time of going to press, the House of Commons and House of Lords had yet to reach agreement on amendments, which must occur before the end of July for the Bill to go ahead.

Road Safety Act 2006
In February, the fine for using a hand-held mobile phone increased to £60 and three penalty points.

Case study: Pfizer

Pfizer bones up on smoke laws

Global pharmaceutical company Pfizer, which has 2,200 company car drivers, is currently grappling with the introduction of the smoking ban in England.

Lynne Bundle, fleet and mobile phone manager, explains: “We have sent out some guidelines but there are still some grey areas in that [we] have 635 opt-out drivers [who take a cash allowance instead of a car] and we are not quite sure what to do with them. Are they predominantly business drivers or are they predominately private? That is [something] we need to establish.”†

The company has already sent out temporary no-smoking stickers as required under the legislation. “We are having some complaints about the stickers. It has been raised by a driver that [these] may flag company cars as opposed to private cars and, therefore, there is a possibility that it may increase theft. I don’t know how real that [issue] is going to be.”†

But she adds that while it is vital that drivers comply with the regulations in order to avoid fines, there is only so much the organisation can do in terms of policing. “We can issue guidelines but we can’t sit with every driver,” says Bundle.