Introduction to this document

Cars and car allowances policy

If you provide your employees with a car you can use a policy to set the detailed terms and conditions of its use. However, you must now provide the key information relating to benefits, including company cars, in the written statement of employment particulars, or employment contract, itself.

A company car

When providing an employee with a company car, you need to think carefully about who is going to pay for what in terms of fuel, insurance, MOT, licensing, repairs, etc., who can drive the car, to what extent it can be used for personal purposes or taken abroad, what obligations you are going to place on the employee in relation to looking after it properly, reporting defects, accidents or parking/speeding fines and in what circumstances you can ask for the car back, etc. Our Cars and Car Allowances Policy statement covers all these issues and many more. It’s intended to supplement our Car or Car Allowance Clause.

The cost of repairs

Car repairs don't come cheap, so you will want to ensure the employee pays for them in the event that they cause damage to the vehicle due to their negligence or wilful default. Where there's an accident, you might also want the employee to pay the insurance excess. Our policy statement provides for the employee to bear the cost in these circumstances. It's only possible to have a deductions clause (to allow deductions to be made from the employee's salary) in the policy statement itself if it clearly forms part of the employee's employment contract. If in doubt, repeat the deductions clause in the employee's contract – which is what our car or car allowance clause does.

Mobile phone use

It’s not normally your problem if an employee gets in trouble with the police for using their hand-held mobile phone while driving, However, it is a criminal offence if you require or “cause or permit” an employee to use a hand-held mobile phone whilst driving. Our policy statement makes clear what your position on this should be.

Vehicle tracking

Finally, our policy includes an optional section on vehicle tracking which you should include if you intend to fit satellite tracking systems to company cars. If you do this, only monitor the car during business use and enable the monitoring to be disabled during private use. Vehicle tracking is covered by data protection provisions and therefore you should first carry out an impact assessment to consider whether the benefits justify the adverse impact on employees.