Employee Company Car Agreement | Contract Template and Tips

Before handing over a company vehicle to your employee make sure there is a company car policy in place. Here are some tips and free template to get started.
signing customer car policy contract, agreement

Does your organisation provide company cars to employees to save running cost and improve efficiency? Then you will need a detailed company car policy to outline how your staff can use the vehicle and guard your investments.

Unfortunately, many businesses do not know how to write a comprehensive company vehicle policy that takes care of their interests.

We discuss how to write an employee company car agreement that meets the British Vehicle Rental & Leasing Association (BVRLA) guidelines.

You can also download a free contract and policy template with examples of clauses to have in the document:

Get A Free Company Car Policy Template


What Is a Company Car Policy?

A company car

A company car policy, or agreement, is a contract that outlines how employees can use a company car. The agreement applies to all employees eligible to receive a company car and use it to complete both business and private transport needs specified in the contract. 

This is a legally binding document that stipulates the dos and don’ts that come with company car acquisition. They contain car policies and their usage in the context of the company. The contract should include or mention:

  • Parties involved: This is the specific employee who qualifies to obtain the car and the company issuing the vehicle.
  • The Obligations: These are guidelines that the employee is expected to adhere to concerning driving the car. These include things such as valid driving licenses, traffic laws, and carrying of non-employees, among other rules.
  • Insurance and accident: This clause shows the insurance policy that caters to the car in case of an accident. Moreover, it outlines on which grounds the insurance might not be covered and whenever it is an individual’s responsibility.
  • Disciplinary: This clause should detail on which grounds a personal company car privilege might be stripped from the employee and the company reclaims the car.
  • Other guidelines: The contract should also state the type of car and the individual’s condition when issued with the company car. Additionally, it should have a clause for car licensing and integration of the country’s vehicle and leasing association guidelines.

Since company vehicles are the property of the employer, it is important to provide guidelines that show what employees can do with the organisation’s vehicles.

Read more: what is corporate car sharing?

Why Do You Need a Company Car Agreement?

A company car agreement establishes the employees who qualify to use a company car. The company vehicle policy also highlights the requirements for using a company fleet vehicle. This agreement also outlines the rules guiding the use of company vehicles.

The contract describes what makes up company car misuse and the disciplinary action for defaulting employees. A company car agreement aims to ensure that use of company fleet vehicles aligns with bvrla guidelines and fair wear and tear car usage

What Does this Company Car Policy Need to Include?

A company is responsible for making the employee comfortable executing their tasks while using a company car. A company car policy should not hinder an employee’s ability to execute their responsibilities but instead, be a tool for effective business.

A company should consider responsibility for an employee’s underperformance when citing the misunderstanding of the company car use policy as the reason. Establishing an effective Human Resources department to be available when misunderstandings arise is important to combat such misunderstandings. Furthermore, there should be a resource for employees to address company car policy issues.

An effective company vehicle policy needs to include the following clauses:

Woman driving, fair wear and tear usage and company vehicle policy

1. Fair Wear and Tear Car Use Definition

According to bvrla guidelines, fair wear and tear car use stipulates the ideal condition of a company car considering vehicle age, mileage, and overall condition. The guide stipulates that the vehicle’s maintenance must meet manufacturer standards. The employer must have a full set of keys and documentation, and all electronic features should work correctly. Bvrla guidelines also state that the interior and exterior of the car must be in good condition, with only minor surface damage.

2. Purpose of Car Provision

Under this clause, the company car policy outlines the primary purpose of providing the vehicle to the employer based on their employment contract. Here, you will mention the specific make and model of the vehicle, the age and its value. The section also states whether the vehicle is strictly for undertaking company business or if the employee can use it for personal transportation. This is also where you mention what you will pay for things such as maintenance, MOT, insurance, fuel for business use and licensing.

Read more: What Are The Different Types Of Fleet Cars & How They Are Changing?

3. Employees Eligible for a Company Car

This clause outlines the eligibility requirements for using a company fleet vehicle. In most cases, employees whose duties require company vehicles such as delivery drivers and those who need to travel to meet clients and vendors qualify for company cars. Employers may also assign employees company cars as part of their employment benefit.

4. Employee’s Obligations

The company car policy must outline the duties of the employee while using a company vehicle. These guidelines include having a valid driver’s licence, driving safely and responsibly, respecting traffic laws and other road users, and reporting problems or damages to the company cars promptly.

This is also where you state things an employee cannot do with an assigned vehicle. These include smoking inside the company vehicle, using a phone while driving, carrying unauthorised passengers in the vehicle, and transferring ownership of the vehicle.

5. Disciplinary Actions

Use this section to describe the fines and punishments employees may receive when they violate the terms of the company vehicle policy. This may include reprimands or revoking the company car because of the employee’s failure to meet bvrla guidelines on fair wear and tear car use, unauthorised driving or using the vehicle for personal gain.

How Can Vimcar Help Ensure That Employees Stay Within the Contract?

Considering the amount of resources businesses spend on their company fleet vehicles, it is important to install vehicle trackers to prevent misuse and improve overall efficiency. Vimcar’s integrated fleet management solution provides an intuitive vehicle tracking tool that offers real-time company vehicle monitoring. Our vehicle tracking products can help improve fuel economy through route mapping, reduce speeding and accidents, and ultimately protect drivers and the company’s investments.

Digitalising fleets can save businesses up to 20%. Discover how much you could save today, with our ROI Calculator.

BVRLA Guidelines

The BVRLA is there for leasing companies and car rental to teach them to satisfy the automotive industry’s customer interests. It’s a self-governing body that protects anyone who wants to work with a BVRLA approved car dealer or intermediary.

Because the vast majority of fleet cars are leased, this is a very relevant organisation for most fleet managers, especially those drafting up a company car policy.

BVRLA guidelines

It’s an essential association to the United Kingdom. It contributes billions of pounds to the economy through car hiring and leasing, new vehicle buying, second-hand car markets, and direct management.

When you choose to work with a leasing company that’s part of the association, you get peace of mind because:

  • With 100% safety satisfaction, no one can mislead you. It means that any information you see about your preferred dealership is correct, and all the products are of good quality because the BVRLA has checked them. The association accredits quality.
  • The ease of access to information on demand is possible. There are strict guidelines for members to follow, and I will gladly clarify all the information before you approve or sign anything.
  • Free customer advice. When planning to hire a car, they offer supportive advice on whether to lease or buy a new vehicle.

Choosing a BVRLA group member means associating with people who understand all the BVRLA Guidelines, processes, and rules. It is suitable for anybody searching to hire a motor vehicle because you get a group dedicated to ensuring 100% satisfaction during your rent out period.

The BVRLA guidelines stipulate fair effect-of-use on a car at the termination of the contract or rental agreement. The UK’s leasing and association guidelines make it easy for a company’s employees to follow the laws and driving policies. 

What are the BVRLA guidelines?

The modest effects of BVRLA guidelines are for checks of the essential aspects of a vehicle, including its age, mile per kilometer, and overall car condition.

The guidelines are concise and precise, and if followed correctly will help the driving avoid acquiring extra costs when giving back the automotive. The BVRLA guidelines include:

  • The keys and papers issued when taking the car should all be available.
  • All the electronic features are functioning as they should
  • The outer has minimal physical damage
  • The interior is in perfect condition
  • The car maintains the manufacturer’s standards

Any company car policy should reflect the need to follow these guidelines.

What can I do to follow the BVRLA guidelines?

Following BVRLA guidelines

Following BVRLA Guidelines mainly involves cutting extra charges when returning the motor vehicle by ensuring that it is perfect. In case of physical damages, you should communicate to the person in charge of the fleet for quick assessment and fixing.

Check the vehicle’s condition for the modest effect of usage for at least three months before the end of your contract or lease agreement. Fix any damage that is a bit on the extreme side, and don’t forget to replace any missing items or other parts. In case of conflict, there are conflict resolution alternatives.

What are the benefits of having a company car policy?

A company car policy is not simply a legal exercise or a piece of paper that is left in a file to be ignored. The rules set out in the policy determine how effective and well-managed your company car system will be, so the wording matters. And getting the wording of a company car policy right will have major benefits when employees start to use company cars.

Sign of benefits
  • Penalties ensure that staff are aware of the consequences of improperly using company cars.
  • If vehicles are legally stipulated as business use only, companies can claim 100% VAT rebates for finance rentals.
  • Issues relating to licensing and tax are laid out clearly, making administration and monitoring much simpler.
  • Vehicle tracking can be implemented on a solid legal basis, ensuring that employees are where they need to be at all times.
  • Well-written agreements ensure that companies meet BVRLA guidelines on rental vehicles when running a company car policy scheme.

Having a company car policy can work with tools like Vimcar’s Fleet Geo to improve efficiency, boost staff morale, and increase profits. In fact, watertight policies are the foundation of company car systems, so it’s vital to get them right before investing in vehicles or infrastructure.

Last Words on Company Car Policies

Vehicles have become essential tools of business, and companies are embracing providing cars for their employees. Whether for personal or business use, companies have resorted to providing their employees with vehicles. 

However, not all companies do, or should, treat company car benefits the same. Businesses must decide who qualifies to obtain these cars and the rules that guide the cars’ acquisition. 

Therefore, companies have come up with car policies that guide the use of company cars. A company car policy provides a comprehensive guide on matters concerning the use of the company car.

Employer handing over a company car policy to an employee

Both the company and employee need to make sure a car policy is in order. Each party is at risk running loss with the car as a liability rather than an asset to the company. Also, lack of a proper car care policy jeopardises the company’s normal operation, especially the services revolved around effective use of company vehicles. 

For instance, the company policy stipulates that every company car is fitted with a fleet Geo tracker. This will enable the use of the company car efficiently and optimised for both employees and the company. Therefore, before acquiring the company car, it is wise to read the company car policy and company car contract effectively.

Having a comprehensive company vehicle policy is essential if you want to get the best out of your fleet cars. If it is well-written and enforced, a company car policy can increase productivity, enhance efficiency, and reduce misuse of company property. Installing Vimcar’s GPS Fleet Trackers can give you more control over how employees use company vehicles and keep misuse to a minimum.

Vimcar representatives offer exemplary support and are available to help you understand the benefits of fleet tracking. Our fleet management experts have answers for any questions or concerns that may arise.

Visit our website to learn how Vimcar cuts costs and optimises your fleet management workload.


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