News & Insights

From risk to asset: How to ensure your 'grey fleet' has the green light

Published 30 August 2018

‘Grey fleet’ may be a relatively new term in Australia, but the practice it describes is not. For some time, organisations of all sizes have benefited from workers using their own vehicles - even if the risks are poorly understood and managed.

This is expected to increase in the new NDIS environment. As the sector scales up and providers look for flexible ways to meet client needs, the use of grey fleet will become an important tool to manage the provision of disability services.

The good news is that, while operating a grey fleet is a risk, it can be managed.

What is a ‘grey fleet’?

The term ‘grey fleet’ refers to vehicles used by an organisation that it doesn’t own, which often means vehicles owned by employees that are used to conduct business. This extends beyond employees to workers more generally.

If one of your employees drops mail off on the way home from work, an executive uses their own car to travel to client meetings, or a big-hearted volunteer delivers parcels late at night for your not-for-profit organisation, you do have a grey fleet – whether your organisation is aware of it or not.

Who is responsible?

Most organisations are aware of their responsibilities under OH&S legislation when it comes to company-owned vehicles. But what about grey fleet? It turns out that, even if vehicles are not directly owned and operated, if an employee is using them for work purposes the organisation does shoulder responsibility.

The recent Grey Fleet: Legal Implications for Businesses report, complied by Flinders University, found that a range of laws implicate businesses in the use of grey fleet, from national Workplace, Health and Safety legislation (where the definition of a ‘workplace’ includes vehicles) to state-based Workers Compensation regimes and basic motor vehicle regulations like licensing.  The conclusion? Take control of your grey fleet, or risk the consequences.

“Significant adverse legal implications may follow for individuals and organisations who breach work health and safety obligations or who are found to be criminally liable or to be liable for negligent acts or vicariously liable for the actions of others,” Associate Professor Tania Leiman wrote. “Obligations in relation to management of safety of either workers or volunteers using grey fleet and safety of the public should therefore be taken very seriously.”

NDS grey fleetWhat are the risks?

Statistics show the majority of workplace fatalities in Australia involve a vehicle. According to Safe Work Australia, in the 14 years from 2003 to 2016, two thirds of worker fatalities involved vehicles, while 59 per cent of bystander fatalities were due to vehicle collisions. In 2016 alone, a total of 76 workers died as a result of vehicle collisions – or 42 per cent of all worker fatalities in that year. The fatality statistics emphasise the operation of any fleet is a high risk business.

Unfortunately, grey fleets only increase this risk. Firstly, this can result from a lack of knowledge: it is common for organisations to be unaware they are even operating a grey fleet, the extent of their exposure, or of the risk involved.  Grey fleet assets are also inherently riskier than company fleet, often consisting of older vehicles, with less up-to-date safety features like air bags, stability control and anti-lock braking. Important compliance considerations like the licence status of drivers are also harder to manage - and easier to overlook.

Mitigating grey fleet risk

Running a grey fleet has many advantages. For example, it can help reduce the cost of owning and maintaining a traditional fleet, which in a Disability Services context, can help providers fulfil their important role more efficiently and effectively.

However, mitigating the risk is essential. Organisations will need to determine if they have a grey fleet, whether it is desirable to continue or suspend running one, and develop and communicate robust policies to employees and workers.

1. Discover

Conduct an audit – either through internal engagement and consultation, or by using a third party –to determine the extent to which a grey fleet is in use. This includes assessing what vehicles employees are using, when and how far they are driving them, and who the drivers and passengers are.

2. Decide

Determine whether operating a grey fleet is desirable. This includes assessing whether it meets the risk appetite of the organisation, whether the cost benefits outweigh this risks, and how this will help meet the goals of the organisation.

3. Deliver

Develop the necessary policies and procedures. This will include addressing elements like driving behaviour, the types of vehicles permitted, maintenance requirements, providing information on threats to safe driving like fatigue, drug and alcohol use, as well as licence requirements and journey planning.

Grey fleet, green light

Mitigating grey fleet risk does not stop there. Policies and procedures need to be communicated and promoted to employees and workers, and will need to be monitored on an ongoing basis using audits or random inspections, while the accuracy of records on licences, insurance and vehicle details will also need to be maintained. If necessary, disciplinary procedures will need to be put in place for use in the case of a breach, to further support the organisation’s position.

The good news is, organisations that choose to take a proactive approach to managing and mitigating grey fleet risk can enjoy the benefits of a powerful and flexible asset, which can help take their organisation further down the road.

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Gallagher is the endorsed insurance broker for the National Disability Service. 

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