Company Owned Car Policy

Some employees in our company have been given cars that are owned by the company. I want to define the limit for fuel and maintenance expense reimbursement. What factors should i keep in mind for defining a policy.

Hi Imran,

Each vehicle should have a Journey Log, kept in the car.

This log MUST detail all official journeys, details must include date and time journey started; odometer reading at start of journey; odometer reading at end of journey (NOT end of day, but EVERY journey undertaken). Fuel reimbursement is then calculated on kilometers per liter basis. Where the vehicle is used for private purposes then the log is NOT filled in.

The vehicle should be maintained as per the service schedule of the car and paid for by the company. Apart from punctures and replacement of tyres all other minor expenses such as replacement of bulbs etc are at the expense of the employee, (after all he does use the car for private purposes).

The policy should also mention the minimum amount of fuel the car must have AT ALL TIMES and the general cleanliness of the vehicle, weekly checks such as tyre pressures, fluid levels etc and monthly checks such as condition of wipers etc. after all the vehicle represents your company. The policy should also clearly mention if the vehicle can be driven by someone else other than the driver, (such as spouse), in which case you should hold a copy of their driving license as well. If you allow non-employees to drive the vehicle, you must check with your insurance provider if cover will be provided at no extra cost.

If an accident occurs, or a claim is made on the insurance, the policy should also clearly state the consequences if the driver is found to be at fault, such as paying for damages or the insurance excess. You should format and keep copies of an accident report form in the vehicle along with the Journey Log.

If the vehicle is leased then the leasing company will also place some obligations, these should be passed on as the responsibility of the employee.

I hope the above is of some help.

Regards,

Harsh

Dear Harsh,
Thank you for the information. I am planning to keep a limit for fuel as well as maintenance. Say monthly limit of Rs. 6000/- subject to producing the bills. Is that fine?

Hi Imran,
Yes you can put a limit, but I would ask you to consider some flexibility, for example, if the employee has run up to the limit for fuel he should be allowed to go over the limit if the journey was absolutely essential.
Also, you should consider if you want to include "roll-overs". This means if an employee spends Rs 5000 in one month can he spend Rs 7000 the next. My advice would be, NO.
Remember that once you have formulated the policy, you should print off two copies for each driver/employee; one for them to sign and return and one for them to keep.
I hope the above helps,
Harsh