How to Manage Fleet Risk

8/8/2019 How to Manage Fleet Risk

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how to manage...

fleet risk

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Sponsored by


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Leader column

Sponsors comment

Why worry about fleet risk?

Legal issues

Health and safety policy

Assessing risk

Reducing risk

Driver checks

Driver training

The How to Manage guides are published by Employee Benefits, Britains leadingmagazine for benefits decision makers. Employee Benefits is published by CentaurMedia plc, the UKs premier independent business publisher. Employee Benefitsaccepts no responsibility for loss or damage to material submitted for publication.Copyright Centaur Media plc. All rights reserved. No part may be reproduced in anyform without written permission of the publisher. ISSN 1743-081X. Subscribe: 020

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contents

employee benefits how to manage/fleet risk 2006 3

Sponsored by


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editorial

Amanda Wilkinson

Editor, Employee Benefits magazine

In these uncertain times, risk management is moving up

the corporate agenda to find a place at boardroom

level. Although fleet management is a long way

removed from international terrorism it too has risksassociated with it that cannot be ignored.

In fact, the responsibilities of senior management in

relation to employees using company or privately-owned cars for business

purposes is on the increase. At present, under existing health and safety

legislation, organisations have a basic duty of care to ensure the wellbeing

of staff as is reasonably practicable and that other people are not put at risk

by work-related driving activities.However, the Corporate Manslaughter Bill, due to become law in 2007, is

set to penalise organisations where health and safety processes have

broken down and led to gross negligence manslaughter. This, combined

with other incoming legislation and changes to the police Road Death

Investigation Manual, will undoubtedly serve to tighten up the

management of fleets.

Editor Amanda Wilkinson Senior reporter Vicki Taylor Art director Caitlin Smail

Production editor Roger Carter Production manager Simon Hadley Contributor

Curtis Hutchinson Display sales executive Catherine Bell Publisher Debi ODonovan

Telephone: 020 7970 4000 Fax: 020 7943 8094 Email: [email protected]

www.employeebenefits.co.uk


how to manage fleet risk


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industry comment

RISK MANAGEMENT is now one of the biggest workplace issues facing human

resources. And recent developments, such as the closer working relationship

between the police and the Health & Safety Executive (HSE) with regard to road

traffic accidents, are making British boardrooms take even greater notice of fleet

management issues.

Amendments to the Road Death Investigation Manual (RDIM) announced in July

make sober reading for HR managers, who may now come under far greater levels

of scrutiny following road accidents. The most significant feature contained within

the annex to the RDIM is the instruction to involve the HSE following a road

incident where failures in safety management have been identified.

The closer relationship between the police and HSE can only increase the need

for organisations to review their risk policies. It will also place further pressure on

HR managers, fleet managers and company directors to ensure they have the

appropriate systems and processes in place.

While a few enlightened businesses see the measurable benefits of adopting a

risk management culture in their organisations, a large number still see it as a waste

of time and money.

Organisations need to understand that poor health and safety procedures are no

longer acceptable. Reducing risk is all about caring for workers and any financial

bonus should be considered as an additional benefit.

HR managers should investigate introducing a comprehensive risk management

programme. These programmes should be tailored to the organisations specificneeds, be robust, auditable and cover all the elements to protect the employer, its

employees and other road users.

Diarmuid Fahy, fleet risk manager, ING Car Lease

Why fleet risk has been bumpedup the boardroom agenda



5/17

8 employee benefits how to manage/fleet risk 2006

IGNORANCE is far from bliss when it

comes to managing a company car

scheme, regardless of whether

employees are provided with company

cars, cash allowances or use their own

vehicles for work-related business.

In fact, organisations are subject to

specific duty of care obligations in

relation to all employees who drive

during work time. Failure to ensure

that their policies and practices are

compliant can result in prosecution,

and ignorance of the law is an

inadequate defence for fleet managers

and the organisation itself.

FatalitiesThe level of potential risk for managers

who are not familiar with the relevantrules and regulations is high. According

to the Health & Safety Executive (HSE),

up to a third of all road traffic

accidents involve someone who is

working at the time, with these

accounting for more than 20 fatalities

and 250 serious injuries every week.

Employers need to think in terms of

establishing clear audit trails that coverthe safety at work of their employees

and formalise their corporate duty of

care responsibilities.

While this is reasonably

straightforward for company-run car

schemes, systems and procedures also

need to be put in place to cover

employee-owned vehicles used for

business. For example, there is a duty

to ensure that employees have

adequate insurance cover and are

driving vehicles that are regularly

serviced and maintained.

An essential starting point to

assessing duty of care responsibilities

and procedures in relation to staff

using cars on business is the guide,

Driving at work: Managing work-

related road safety, published by the

Department for Transport and the HSE

(available from

www.hse.gov.uk/roadsafety).The guide outlines an employers

legal responsibilities, the benefits of

managing a successful work-related

road safety programme and offers

practical guidance on how to manage

a scheme. It also helps employers to

evaluate and assess potential risks.

A stumbling block for many

organisations in relation to managingwork-related road safety is the lack of

awareness or, in some cases, the lack

of interest at boardroom level.

Drive the message homeBeing oblivious to at-work driving risk is no defence in the

eyes of the law and doesnt make good business sense either

Why worry about risk?


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THERE are two main pieces of

legislation governing work-related road

safety that fleet managers and anyone

else involved with company cars should

be aware of. These are the Health and

Safety at Work Act 1974 and

Management of Health and Safety at

Work Regulations 1999.

However, employers should also

keep a close eye on the forthcoming

Road Safety Bill, likely to

become law by the end of

this year, and the

Corporate Manslaughter

Bill, expected to reach the

statute books in 2007,both of which are set to

affect employers.

The existing Health and

Safety at Work Act 1974 lays

down the basic duty of care rules.

These state that employers must

ensure the wellbeing of all staff as is

reasonably practicable.

In the past, these rules have beenwidely interpreted by many employers

to just cover the physical place of

work, whether it is an office, shop or

factory. However, employers should

remember that the rules also apply to

employees using company or privately-

owned cars for business purposes.

Risk assessmentsThe rules also stipulate that it is the

responsibility of employers to ensure

other people are not put at risk by

work-related driving activities.

In addition, the Management of

Health and Safety at Work Regulations

1999 emphasise that employers have

the responsibility to manage healthand safety effectively. Under these

rules, employers have to carry out an

assessment of the risks to the health

and safety of their employees while at

work and to other people who may be

affected by their work activities.

Employers can rest assured though

that the law doesnt apply to journeys

to and from work, unless staff aretravelling to an unfamiliar place.

Move to curb practicesthat contravene the law

Legal issues

Failure to comply with the laws relating to fleet management

could result in legal action against employers and hefty fines


8/17

Failure to adhere to the

rules could result in heavy

fines or legal action. Mel

Dawson, a director ofALD Automotive, the

fleet management arm

of Socit Gnrale

Group, says: Under

existing legislation employers

have a responsibility and duty of

care for the safety of their staff while

driving on business.Failing to satisfy the

legal system that organisations take

work-related road safety seriously

could result in them being fined or

prosecuted for breaches of health and

safety legislation.

Stiffer penaltiesThe incoming Road Safety Bill is part of

the governments commitment to

reduce the number of people killed

and seriously injured on roads by 40%

by the end of the decade. Persistent

speeders and drivers using hand-held

mobile phones while driving are likely

to be targets facing tough penalties.

For example, drivers caught using

mobile phones while driving will see

fines increase from 30 to 60 and

have three penalty points on their

licence. Also included will be the newoffence of causing death by careless

driving, which will have a penalty of up

to five years imprisonment.

The Corporate Manslaughter Bill is

also set to have far reaching implications

for employers if members of staff are

killed or cause the death of another

person while driving on business. This

legislation is designed to penalise

organisations for management failures

that have led to the breakdown in the

health and safety process leading to

gross negligence manslaughter. It will

target rule-setting senior managers

within organisations, rather than middle

managers who follow them.

Recent changes to the police Road

Death Investigation Manual further

highlight the way fleet risk is moving up

the agenda. The changes, announced in

July, state that the Health & Safety

Executive should be involved in road

accidents where failures in safety

management are identified.

The Health & Safety Executiveholds information on the latest

legislation. Visit

www.hse.gov.ukfor more

information.

The Driving Standards Agency

website has information on the

Road Safety Bill. Visit

www.dsa.gov.ukfor more

information.

The British Safety Council is

able to offer a broad range of

advice on best practices in

health and safety.Visit

www.britishsafetycouncil.org

to find out more.

The Workplace Law website

contains a range of up-to-date

information on existing and

upcoming legislation. A guide

is also available to buy online

called Driving at work 2007:

Law and practice special report

(94). For more details visit

www.workplacelaw.net.

Further information


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BY LAW, all organisations employing

more than five people should have a

written health and safety policy, which

specifically includes work-related road

safety (Management of Health and

Safety at Work Regulations 1999).

And as the Road Safety Bill, that

includes tougher penalties for

speeding and using a hand-held

mobile while driving, and the

Corporate Manslaughter Bill both

head for the statute books, it is now

even more important for organisations

to make sure they have a clear and

up-to-date road safety policy in place.

However, Paul Holmes, head of risk

management solutions at the AA,

warns that the policy must also beused and read by staff if it is to offer

any protection to employers in the

event of a breach.

Too many firms believe that risk

management is a tick-box exercise in

compliance rather than a living and

breathing set of guidelines that drivers

can go to bosses with questions about.

Many firms claim to have water-

tight risk management policies but

when you read them they are full of

holes that employees who have been

involved in an incident could easily

argue no-one had ever mentioned to

them, Holmes adds.

Bombarding staffIt is important then to include

specifics in your policy that spell out

what might seem obvious to

employees. This would be a good

place to formalise, for example, your

organisations position on mobile

phone use while on the move and the

maximum acceptable daily mileage.Holmes argues that employers

should also hold regular meetings

with staff to discuss car policies and

driving behaviour rather than simply

bombarding them with complex

documents that they are unlikely to

have the time or inclination to read.

Pay more than lip serviceIt is vital to have a health and safety policy, but to stand up as

a legal defence it must also be read and understood by staff

Health & safety policy



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Having a policy is one thing, but

communicating it is completelydifferent and there is no substitute to

just talking to staff and also getting

written feedback that proves they

understand where their responsibilities

start and the companys end and vice-

versa, he advises.

Making sure all bases are covered

from a legal standpoint can obviously

help protect the organisation, but

having a useable policy covering

work-related driving can have

additional benefits, too.

Mel Dawson, a director of ALD

Automotive, the fleet management

arm of Socit Gnrale Group, says:

The benefits of a co-ordinated and

properly managed work-related road

safety programme are not only legal

but there is a moral aspect and a clearfinancial aspect that translate into

lower operating costs, reduced staff

absences due to injury or work-related

ill health and reduced insurance

premiums as accident claims tumble.

So the message to employers with

staff driving on business is to

implement a policy if they havent

already done so, while those with

existing policies should review their

current measures to check whether

they offer adequate protection to

both the employer and its employees.

Finally, organisations should

remember that they need to be fully

aware of their obligations and not

simply pay lip service to them.


An organisations formal health and safety policy must be thorough, easily digestible, accessible tostaff and regularly updated to make it as relevant as possible.

Colin Tourick, director of the fleet consultancy Colin Tourick and Associates, explains: The first

step for most organisations is to produce a formal health and safety policy document that sets

out, at a high level, the employers commitment to safety at work and the rules they expect their

staff to follow and the managing director should then sign it.This top-level endorsement from the outset is important as it will give credibility and authority

to the document and highlight the managements thinking to employees.

The document is the ideal place to formalise your companys position on key issues, including

the use of mobile phones while driving and maximum daily driving times and mileages. Make sure

it also spells out key aspects of the Highway Code especially the adherence to speed limits.

Organisations in Scotland should also consider covering smoking, which is now banned in

public places, including working environments.

The Health & Safety Executives Workplace Transport Safety Document HS (G) 136can help

employers with formulating a policy. Visit www.hse.gov.ukto view a copy.

Formalising a health and safety policy


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UNDER the Management of Health and

Safety at Work 1999 Regulations,

employers are required to carry out risk

assessments of the workplace and any

workplace activities, including driving.

In order to conduct these

assessments, the same should be done

as with any other workplace risk. That

means that the activity should be

looked at and any risks should be

recorded and reduced where possible.

Richard Schooling, the commercialdirector of fleet management company

Alphabet, says risk assessments require

board level direction and management.

Duty of care [responsibilities] require

employers to ensure that equipment

used by employees is both safe and

used safely. The government makes no

secret of its appetite for a high profile

prosecution for failing to comply with[its] at-work road safety requirements.

Depending on the size and structure

of the business, a senior director or

manager should take responsibility for

the assessment and involve those

responsible for human resources, fleet

management and the organisations

other legal compliances to make it

totally integrated with the

organisations culture. It is also

beneficial to involve employees who

drive at work, since they will be able to

identify any particular risks they have

encountered or any concerns theymight have.

The aim is to minimise the risk of

someone being injured or killed

through driving at work.

Claims historyA useful starting point for a risk

assessment is to carry out a review of

the fleets recent claims history as thiscould pinpoint particular accident

trends and highlight where problems

Driving downonerous risk

Assessing risk

The government has relished high profile

prosecutions of its at-work drivingregulations, so assess risk carefully


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can be addressed. Measures such as

reviewing diary pressures, introducingsatellite navigation devices for high

mileage drivers, and driver training

programmes could are options that

could help reduce risk exposure.

Provider involvementOrganisations running company car

schemes should also consider involving

their vehicle provider in the risk

assessment as most will offer risk

management services.

Fleet management, leasing orcontract hire companies should also

have procedures in place to make sure

routine servicing work is carried out,

tyres and windscreens are regularly

checked and driver licence and claims

records are kept up to date. Working

out what is being covered by these

third-party services will form an

invaluable part of an organisations

risk assessment.

Identify hazardsConsider hazards relating to

the driver, the vehicle and the

journey. Gather the views of

those who drive at work and

research accident claims

records to help identify trends.

Decide who might

be harmedIn an accident it will be the

driver who is most often

harmed, although passengers,

other road users and

pedestrians are also at risk.

Groups potentially at high risk

should also be identified, such

as high mileage and

inexperienced drivers. The

potential risk exposure of these

groups should be relayed to

their line managers who canhelp them plan their workload.

Evaluate and reduce

the risk

Evaluate how likely it is that

each hazard identified will

cause harm and what can be

done to reduce the risk posed.

For example, staff could beencouraged to use public

transport as an alternative,

especially for long journeys or

visits to major cities.

Technologies like video

conferencing could also be

considered. To help protect

drivers from vehicle faults

regular maintenance schedules

should also be place.While this

is easy for company-owned

cars, it might be useful to haveevidence that company-funded

cars are being regularly

serviced and that these and

privately-owned vehicles have

up-to-date MOT certificates.

Record your findings

Organisations with more than

five employees must record thefindings of their risk

assessment. Employees must

also be notified of the findings

and any steps taken.

Review your assessment

Regularly review and update

the risk assessment to keep it

in line with legislative

developments or changes in

company car provision.

Carrying out a risk assessment

There are five steps that should form the basis of any risk assessment.

Each should be carried out specifically in relation to driving at work:


13/17

EMPLOYERS who provide vehicles for

staff as part of a traditional company car

fleet are in the best position when it

comes to complying with current and

pending duty of care laws.

Grey areas arise where cars are

bought through a cash allowance

scheme or where employees are driving

privately-owned vehicles for work. In

these cases, it can be difficult to see

where the employer and staff

responsibilities begin and end.

When the rules governing personal

taxation on company cars were

changed at the beginning of thedecade, cash for cars gained in

popularity among employers and

employees. However, this has led to

the creation of unstructured schemes

where employees can choose exactly

what vehicle they want, regardless of

its suitability for work and its road

worthiness and safety record.

Paul Holmes, head of riskmanagement solutions at the AA,

warns: These cars are completely off

the radar. The driver often believes its

the firms responsibility and the

business thinks it can successfully

wash their hands of the issue, [but]

neither is right.

If the cars are owned by the

organisation, robust systems should be

in place to check factors such as the

status of employee driving licences, car

servicing schedules and general vehicle

road worthiness. The employer will also

know how the car is insured and have

access to staff insurance records.

The same systems should be in

operation if cars are provided under a

contract hire or leasing agreement,where most of the day-to-day

management and risk assessment

functions are outsourced to a specialist

fleet management company, which will

report regularly to the employer.

Jeremy Hay, chief executive of

Essential Risk Consultants and Realtime

Risk Assessment, points out the

problems facing organisations offeringcash allowances or permitting

employees to use private cars.

Probably the biggest single problem is

Learn to drive user admin

Rigorous document keeping and checking is a must for bosseswhen their staff drive privately-owned vehicles for work

Reducing risk



14/17

where employees use their own car for

work purposes. Our research shows,

for example, [that] between 14%-30%

of employees are not covered for

[driving at work] under the terms of

their insurance policy.

It would make sense then for

employers to regularly check the status

of their employees own insurance.

Organisations also need to remember

that staff using cars that have been

bought with a cash allowance or are

privately-owned also have the

protection of the Health and Safety at

Work Act 1974. This means that there

must also be a risk-management policy

in place that covers them.

Colin Tourick, director of the fleet

consultancy Colin Tourick andAssociates, explains: Your health and

safety policy must cover car use

regardless of how you acquire vehicles.

If an employee uses their own car

for work, you, as an employer, are

liable for the health and safety of the

driver and other road users arising

from that use. You cannot absolve

your organisation of its health andsafety responsibilities by moving your

fleet cars to a cash-for-car or

employee car ownership [plan].

The cash versus car debateCash-in-lieu of a company car gives employees

the opportunity to fund their own cars using

company-provided money.This is taxed at source

and is usually paid on a monthly basis with

employees salary.These allowances can be used

to fund a myriad of different finance packages

ranging from a structured employee car

ownership plan (Ecop), where the employer has

brought in the services of a fleet funding

company to supply and administer the vehicles, to

a dealer-based leasing package. Both types of

schemes can be structured to give the employee

vehicle ownership at the end of a set period.

However, some organisations are beginning to

review their cash allowance provisions in light of

their duty of care responsibilities. The highest

profile company to do this so far is the high street

bank Barclays, which last year made a strategic

corporate decision to end its Ecop and move 3,500

employees back into company-provided cars.

Andy Leach, sales and marketing director of

CFC Solutions, a car fleet management company,

says: Organisations didnt use to worry about

the use of private and cash-in-lieu cars used for

business but now they are seen as designated

workplaces and employers have greaterawareness of their duty of care responsibilities

and the need to be compliant.

He adds that many employers are now

offering short choice lists for cash-in-lieu drivers,

which stipulate that the vehicles have lumbar

support and a high safety rating in the European

New Car Assessment Programme crash tests.

Leach thinks some companies are using cash-

in-lieu schemes as a recruitment tool for middlemanagers who are not expected to drive long

distances, while pushing their mainstream drivers

back into company cars.



15/17


ONCE organisations accept that cars

used on business are an extension of

the workplace, there are various checks

and balances that can help reduce the

risk to the employer and its employees.

These can start as early as the

recruitment process by checking the

driving licences of any candidates who

would be expected to drive at work.

Graham Hine, the Midlands region

chairman for the Association of Car

Fleet Operators, says: There is a strong

argument that licence checks should be

part of the recruitment process. Ifsomeone has nine points on their

licence that they have gathered in the

previous two years then are they really

the candidate you are looking for?

He also thinks that steps to control

at-work driving risk should be part of

the induction programme on joining.

Organisations can spend weeks

inducting new employees in all sorts ofways but then just hand them the keys

to a 25,000 car with barely a second

thought. Yet, in the wrong hands, that

car is more likely to result in injury or

death than any other part of that new

employees activity at work, Hine adds.

Fit for the roadWhen it comes to existing members of

staff, measures should also be

regularly taken to ensure they are fit

for the road. This might include, for

example, monitoring when eyesight

tests are carried out and what the

results are, as well as monitoring thetime employees spend driving.

Regular licence checks on existing

staff are not a legal requirement, but

should be viewed as an integral part of

an employers HR operation. They are

the only reliable way to monitor which

drivers have been caught speeding

and those who are in danger of losing

or having their licences suspended.These days, speed cameras line vast

Check for black marks

Driver checks

Driving licence checks and monitoring eyesight tests can helpprotect staff and meet employers duty of care responsibilities


16/17

employee benefits how to manage/sickness absence 2006 19

numbers of roads, and organisations

should be alert to any employees

approaching or exceeding 12 points,

when disqualification becomes

mandatory and could obviously affect

an individuals ability to do their work.

Monitoring driver papersThe best way to monitor driving

licences to is view and photocopy

them every six months and retain

them on file. For higher risk staff with

more than eight points it would be

worth reviewing their licences every

three months. For employer-provided

cars, employers should also consider

regular reviews of spouse and partner

licences to ensure the people

potentially driving them are

competent and legal.

Employers looking for a more high-

tech way to monitor licences and store

other important paperwork relating toat-work driving might also want to

consider using one of the specialist

software packages available on the

market. These can include, for

example, functions for online driver

and vehicle licensing checks, insurance

management, web-based driver risk

assessments, outlines for a duty of

care policy, journey logs andmanagement reporting.

Driver check list

There are a number of practical ways employers

can help to ensure their drivers are fit for the

road and raise general standards of safety, says

Colin Tourick, director of the fleet consultancy

Colin Tourick and Associates. The steps

organisations can take include:

Implementing a formalised system for

regularly checking the status of driving

licences of your employees.

Regularly check insurance documents for cars

used on business and MOT certificates of cars

that are more than three years old.

Make sure drivers undergo regular eyesight

tests, including those who do not wear

glasses. Put a monitoring system in place to

record when tests were carried out and what

the results were.

Get drivers to read and sign the health and

safety policy annually.

Consider making drivers pay for the excess on

any insurance claim.This could help them

focus on more responsible and safer driving.

Encourage line managers to monitor the

number of appointments staff make and themileages and times involved.Where possible

encourage the use of video or telephone

conferencing instead.

Ensure that with any employer-provided cars

employees choices include side airbags.

Employers could also consider only selecting

models with high ratings in the Euro New Car

Assessment Programme crash tests.


17/17

20

Safety at a premium

Driver training

To cut insurance costs, organisations are turning towards driver skills

DRIVER training programmes can

improve the skills levels of new and

existing employees driving on business.

As well as helping to improve staff

safety, they can also reduce insurance

costs and provide clear evidence that

your company is taking its duty of care

responsibilities seriously.

However, despite the proven benefits

of driver training, only a small minority

of organisations actually provide it.

According to research by the Institute of

Advanced Motorists, 75% of employees

have never been offered any form of

driver risk assessment or training.

Driver training firms often point out

that if schemes are introduced properly,

and are perceived by employees as a

benefit, then they can also have a

positive impact on staff morale.

However, driver training should not

be viewed as a one-off quick fix, as the

most effective programmes include

follow-ups to make sure drivers have

not slipped back into old habits.

Bill Pirie, a consultant with Driver

Training Matters, says:The six major

hazards seen in collisions are drinking

[and driving], speeding, overtaking,

lack of care at junctions, cyclists and

pedestrians. Training will help drivers to

recognise these through better

anticipation and concentration,

through adopting safety margins

around their vehicles and by creating a

sense of accountability, he says.

Pirie adds that training can have

wide ranging benefits for the company

over and above accident prevention.

As [an employer] you will see results

including reduced fuel and maintenance

costs, lower collision rates and insurance

costs but, most importantly, you could

be saving lives.

Document management and

digital printing firm Oc , is

putting more than 500 company

car drivers through a

psychometric-based online risk

assessment to build on the

results it has already experienced

through in-car driver training.

The company has offered in-

car driver training since 1999. As

a result, it has seen its accident

rate fall from 69% to 39% and a

reduction in annual accident

costs of around 126,000 over

the last five years.

Colin Jones, Oc (UK) fleet

services co-ordinator, says: The

online risk assessments will help

identify our drivers attitudes to

driving risk, while the [in-car]

training allow[s] them to gain a

better understanding of

themselves [and] how they

approach driving.

Case study: Oc (UK)

Documents

How to Manage Fleet Risk