When it comes to company cars, the rules around what you can and can’t do differ from those of owned vehicles. But which laws might workers be unaware of, and what are the potential implications for breaking them?
From driving with passengers or letting your partner drive the car, to running personal errands, the experts at leading fuel card provider Right Fuel Card share seven surprising rules for company car drivers and the potential implications if you are caught breaking them:
1. Usage
Rule: Employees might not realise that they’re restricted from using company cars for personal purposes, unless explicitly allowed by the employer.
Implications: Unauthorised personal use can lead to disciplinary actions, potential reimbursement for fuel and wear-and-tear, and, in some cases, termination of employment.
2. Tax
Rule: Personal use of a company car can be considered a taxable benefit.
Implications: Employees might face unexpected tax liabilities if they use the vehicle for personal purposes. Employers must report this type of usage to tax authorities, which can result in additional tax being deducted from the employee’s salary.
3. Insurance
Rule: Company cars are typically insured by the employer, but the insurance policy might have specific terms and conditions about who can drive the vehicle and under what circumstances.
Implications: If an employee allows an unauthorised person to drive the company car, such as a friend or partner, or uses the vehicle for unauthorised purposes, it could invalidate the insurance. In the event of an accident, this could result in the employee being personally liable for damages and repairs.
4. Driving offences
Rule: Traffic violations and offences committed while driving a company car can directly affect both the employee and employer.
Implications: Employees might be held personally responsible for paying fines or face penalties. Additionally, points accumulated on the employee’s driving licence can affect their own eligibility to drive company vehicles in the future and serious offences could lead to disciplinary actions, including termination.
5. Maintenance
Rule: Employees are often required to adhere to specific maintenance schedules and report any issues or damages promptly.
Implications: Failing to maintain the vehicle or report damages can lead to safety hazards and costly repairs and any negligence could also result in disciplinary actions and potential financial penalties for the employee.
6. Mileage
Rule: Employers might require detailed records of business and personal mileage.
Implications: Inaccurate or incomplete record-keeping can lead to disputes over fuel costs, tax implications, and reimbursement. Employees might face audits and potential penalties from tax authorities if mileage records are found to be incorrect or fraudulent.
7. Licence
Rule: Employees must hold a valid and appropriate driver’s licence to operate the company car.
Implications: Driving with an expired, suspended, or incorrect licence type can lead to penalties such as up to 6 points, invalidation of insurance, and potential job loss.
Matthew Briggs, CEO and fuel card expert at Right Fuel Card, comments: “When using a company car, it’s crucial to understand the specific policies and regulations set by your employer. Adhering to these guidelines helps prevent any legal issues and ensures company standards are met.
“Here are five recommendations on how to effectively stay on top of your company’s car policies:
Matthew advises:
1. Check the employee handbook
“The employee handbook often contains detailed information about company car policies. Carefully review the relevant sections to understand your obligations and the company’s expectations.”
2. Review the company car agreement
“If you’re assigned a company car, you likely signed an agreement outlining the terms and conditions of its use. Be sure to review your company car agreement, ensuring you understand all clauses.”
3. Speak with HR or fleet management
“Your HR department or fleet manager is a valuable resource for clarifying the company’s car and fuel card policies. They can provide additional context and answer specific questions about your responsibilities.”
4. Understand insurance coverage
“Insurance policies for company cars can vary significantly. Knowing what is covered, including authorised drivers and usage scenarios, is essential to avoid potential liabilities. Request a copy of the insurance policy and review the coverage details.
5. Participate in training sessions
“Many companies offer training sessions on the proper use and care of company vehicles. These sessions provide valuable information and ensure all employees are on the same page. Always attend any offered training sessions or workshops related to company car use.”
