September 24, 2015

How to tackle short term or temporary vehicle needs

Solve temporary vehicle requirements

One problem faced by many HR departments in companies that are expanding, or recruiting more staff to fulfil new contracts, is providing a temporary vehicle for new employees who may still be serving probationary periods, or workers engaged on short term contracts.

Often, new starters require access to company transport to carry out their new job function but don’t have confirmed contracts of employment that entitle them to a company vehicle full-time.

New company cars are often leased for three or four years, so ordering one for a new starter still on probation is fraught with potential pitfalls – not least the reallocation of the vehicle if the new starter isn’t confirmed as a full-time employee.

In such circumstances, some companies may be tempted to allow new starters to use their own vehicles and claim a mileage allowance while waiting for their probation period to end and the new company car to arrive.

However, there are a number of potential pitfalls to this approach. Employees’ own vehicles – typically referred to as the ‘grey fleet’ – may not have been serviced regularly or they may be in a generally poor condition. And in many instances, the drivers will only have social, domestic and pleasure insurance rather than the necessary cover for business use.

If anything happens while a grey fleet car is being used on company business, it’s the employer, not the driver, who is liable – and open to possible claims of failing to provide a duty of care if accidents occur.

It is certainly in the employer’s best interests to ensure its employees only use vehicles that are fit for purpose as there is a whole raft of legislation, including the Corporate Manslaughter Act, under which a company could be found negligible in such circumstances.

Finding the right solution for temporary vehicles

The issue of providing temporary vehicles for probationers or other new starters is a headache for many HR departments. But it can be overcome by selecting one of a number of short-term hire or medium hire solutions.

Take daily rental, for example, in which a vehicle is typically hired for a period of 1-28 days. Most daily rental companies offer access to a whole range of vehicles that will suit most requirements, providing a temporary vehicle at extremely competitive rates.

They will typically be accessed via a web-delivered rental management system, which allows users to book, extend and cancel rentals online, as well as monitoring existing rentals and providing a range of management reporting and invoicing.

Daily rental vehicles can usually be sourced by location and by price to meet the exact needs of corporate users, wherever required across the UK.

Traditionally, daily rental firms have provided tariffs that peak at 28 days for longer term rentals and, historically, that may have been sufficient. But today there are other solutions for meeting corporate mobility needs that combine cost efficiency with flexibility.

Consider the mini-lease option

One such solution is a mini-lease of three, six or 12 months. This is substantially shorter than a conventional company car lease but supplied without any form of exit penalty for altering the length of the contract term.

A mini-lease perfectly bridges the mobility gap between daily rental and longer-term contract hire, and provides tailored rates for hiring vehicles for up to 12 months. These usually offer significant reductions against standard daily rental with no reduction in quality or service standards.

If the new starter is successful in reaching the end of their probationary period and securing full time employment, the mini-lease vehicle can be extended on a monthly basis until the permanent vehicle is sourced.

If the new starter is unsuccessful, then the temporary vehicle can simply be off-hired or kept on hire for the next new starter.

Mini-leases can be very cost effective. For example, a typical Ford Focus or Volkswagen Golf can cost as little as £14.95 a day for three months, £13.95 a day for six months or £12.95 a day for 12 months, including road fund licence and vehicle delivery and collection.

Compare that with the cost of allowing employees to use their own vehicles on company business to fill in the interval while they await the arrival of their new company vehicle.

At 45p per mile under the Government’s Approved Mileage Allowance Payment (AMAP) scheme for the first 10,000 miles, employees can soon notch up significant mileage costs in their own vehicles.

Mini-lease in practice

A real life example of how a mini-lease solution met the short term needs of one specific company occurred when a food production company saw its business double in size over a 12-18 month period.

The growth in the company’s business came from a change in policy by UK supermarkets to only source poultry and pork products from British farms, resulting in a rise in demand for its products.

To cope with this increased demand for temporary vehicles, the company appointed the corporate rental arm of fleet management specialist CLM, to provide short term vehicles to cope with the growth in its business.

CLM introduced a mini-lease solution for new starters who were on probationary contracts, because it was ideal for providing temporary vehicles until the employees’ appointments were confirmed.

By using mini-leases, the company avoided getting locked into costly long-term contracts with its leasing company which carried the risk of early termination penalties if the contract was terminated before its agreed duration.

The company found the mini-leases ideal for its short term needs, and also liked the fact that the new vehicles could be booked online, from any location via iPad, smartphone or PC, and that they were automatically delivered to the location where they were needed.