Company Cars: What Rules Do You Need To Put In Place

If you are offering your employees the use of a company car as part of an employee incentive arrangement package it is essential to have a company car policy to protect the business.


James Rowland

Commercial Director James leads Account Management, Sales and Marketing at Neathouse Partners.


12 December 2023


16 July 2024
3 min read

If you are offering your employees the use of a company car as part of an employee incentive arrangement package it is essential to have a company car policy to protect the business.

Read on for guidance on what should go into your company car policy to reduce the workload on HR professionals and to provide clear rules on company car use for your employees.


Why Your Business Needs a Company Car Policy

You need a company car policy if you offer employees the use of company cars as part of their employment benefits package or because a car is an essential requirement of the job.

A company vehicle use agreement sets out who qualifies for a company car and the rules of use.

The policy helps protect the company against:


Non-compliance by the employee with The Working Time Regulations 1998

Disputes /claims

Disputes and claims by employees over company car usage

Discrimination claims

Discrimination claims over company car allocation

H&S breaches

Health and safety breaches

Reputational damage

Reputational damage to the company if a company car is involved in an accident

Car being vinyled for marketing purposes

If you have an existing company car policy it may be time to review it. We recommend consulting with staff and unions to get their input on any proposed changes to increase buy-in.

Get Expert Advice

Contact the team via our quotation form or simply call us on 0333 041 1094 to discuss how Neathouse Partners can support you with all your HR and employment law needs.

The Ground Rules For Your Company Car Policy

With around 10% of cars on the road in company ownership (Vehicle Licensing Statistics 2022), it pays to invest in a company car policy that meets the needs of your business.

Take time to consider the ground rules for your company car policy as it will be binding on the company as well as on your employees.

Consider if:

  • One policy applies to all company car users whatever their level of seniority
  • Company car usage is restricted to business use only or mixed business and personal use
  • You currently use or plan to adopt vehicle tracking
  • Car usage rules allow the car to be driven overseas
  • Partners of employees are included as authorised additional drivers

Woman dangling car keys in her hands

Looking Ahead

No one wants to foresee acrimonious employee exits or accidents involving company cars but HR managers must plan ahead and cover most eventualities, especially when putting a company car in the hands of an employee.

With a comprehensive company vehicle policy, it may not happen, but if it does, you have it covered. Potentially by looking ahead, companies can save thousands of pounds on:

  • Employment tribunal claims
  • Health and safety investigations
  • Third-party litigation for vicarious liability
  • Company reputation management

It also makes the day job easier for HR staff managing recruitment and employee expectations when you can point an employee to the policy for the guidance they need.

Company Car Policy Essentials

What goes into your company car policy or policies depends on your business and the reasons you are providing company cars to some of your employees. Is the car a recruitment sweetener or an essential component of the job or a combination of the two?

Working out what your company vehicle policy is designed to protect against is a useful starting point.

Anticipating issues is another great way to keep ahead. For example:

  • Your company may not currently employ an employee who requires reasonable adjustments on the grounds of their disability and who meets your company car eligibility criteria. However, an employee’s circumstances may change or you may recruit additional staff
  • If an employee is banned from driving or receives points on their license what are their reporting duties under the company vehicle policy and how does reporting non-compliance work with your disciplinary policy and your company car insurance policy
  • If an employee is suspended from their employment pending disciplinary investigation is the employee entitled to retain use of the company car during their suspension

Windscreen shattered

Joined Up Policies

If you have a bespoke company car policy that meets your business needs then that’s great but it needs to be consistent with your employees' contracts of employment or directors' service agreements and your suite of HR policies, including your:

Inconsistencies between policies can be seized on by aggrieved or exiting employees or by third parties after an incident involving one of your company cars. Spending time ironing out inconsistencies keeps things simple when you need to rely on your HR policies.

To ensure consistency, we can review your suite of HR policies and procedures. Our lawyers will flag any issues to address on the latest legislation, regulations, best practice or consistency between your policies.

Leveraging Our Expertise

You would think that drawing up a company car policy would be simple. It normally is until a problem, grievance or claim arises.

Our expert team of lawyers and HR specialists can:

  • Advise on your sector-specific company car policy needs.
  • Review existing company car policies and adapt to changes such as tracking vehicle use or electric car usage.
  • Help ensure your company car policy is consistent with your suite of HR policies.
  • Keep you updated as guidance on best practice evolves.
  • Offer guidance and specialist legal advice on employee incentive arrangements.
  • Provide an accident at work investigative service.

Get Expert Advice

Contact the team via our quotation form or simply call us on 0333 041 1094 to discuss how Neathouse Partners can support you with all your HR and employment law needs.

Neathouse Partners: Your Trusted Partner

We empower employers across the UK with tailored advice, offering strategic guidance that aligns with business needs and goals.

99.2 %

Customer happiness rating

99.2 %

Customer happiness rating



Qualified experts

Chester Headquarters

Regus House, Chester CH4 9QR

Success stories
Having used Neathouse for some time now, I can highly recommend their services. I always get a quick response from my lawyer, the advice is practical, and I always feel confident that they’re helping us with the correct approach.
Jasmin Bemmelen Head of People and Culture @ Action Tutoring Ltd

Have questions?

Get in touch today

Contact us, and our team will get back to you within 24 hours. We value your questions and are committed to getting them answered quickly.

Get a quote

Hello! I am Nicky

Just fill in the form below with your details, and I will arrange for a member of our team to give you a call.

By clicking, you agree to our Privacy Policy