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Over the past year, we have had a number of clients put themselves in a difficult situation by allowing their staff to drop prescriptions off to customers while using their personal cars. In two situations, staff were involved in accidents where their cars were written off.
As small businesses look for ways to optimise their operations and reduce costs, allowing employees to use their personal vehicles for work deliveries may seem like a practical solution. This seemingly thrifty practice can cause plenty of problems – both for staff and the business as a whole. In this article, we’ll explore why using personal vehicles instead of designated corporate cars to run errands is not always the best solution!
When employees use their personal cars for work-related purposes, the business assumes a certain level of liability if accidents, damages, or injuries occur. In the event of an accident, the insurance coverage for the employee’s personal vehicle may not be sufficient to cover the damages, and the company could be held responsible for the remaining costs. Additionally, if an employee is injured while driving their personal vehicle for work, they may file a workers’ compensation claim, which can be costly for the business.
Most personal auto insurance policies exclude coverage for commercial use, including the delivery of goods or services as part of employment. This means that if an employee is involved in an accident while driving their personal vehicle on work deliveries, their insurance provider may deny the claim, leaving them and the company liable for any damages. Even worse, if the staff member only has third party cover, their car could be written off. This can be financially devastating for both parties, especially if the damages are extensive.
The Australian Taxation Office (ATO) provides a cost allowance for employees who use their own cars for work-related purposes. The allowance is intended to cover the expenses associated with using a personal vehicle for work, such as fuel, maintenance, and depreciation.
We encourage businesses to ensure that employment contracts and/ or employee handbooks include a clause that stipulates if employees agree to using their personal car, the business will reimburse them in line with the ATO guidance. In exchange, the employee will ensure their car is roadworthy, they are appropriately licensed and that they have adequate comprehensive insurance.
To find out more about how you can manage your pharmacy-related risks, feel free to reach out at any time.
Giuseppe Carollo
