Risks related to the use of employees’ vehicles for business
To use employees’ vehicles for business has gradually become a common phenomenon. There are various reasons, such as a company brings the proposal due to cost saving, or an employee brings the proposal for his own convenience regarding commute and cost. However, there are risks related to such arrangement.
This article aims to analyze the main risks and countermeasures related to such arrangement.
- Risk 1: Infringement
If an accident occurs, the employee’s vehicle is determined to bear liabilities, and such accident meets the conditions specified in Article 1191, Paragraph 1, of the “Civil Code”, that is, “Where an employee of an employer has caused damage to others as a result of performance of work assignment”, the consequence is that the company shall bear the corresponding tort liability. For example, in the case (2017) Su 10 Min Zhong No. 2545, the Yangzhou Intermediate People’s Court held that, “The existence of the fact that H caused personal injury to W during the performance of his work assignment by using his private vehicle is highly likely,” thereby determining that the company bears tort liability.
Countermeasures: The company could formulate regulations related to the use of employees’ vehicles, or sign an agreement with individual employees. The regulations or agreements shall clearly stipulate that employees have the obligation to abide by traffic rules and drive safely; and if the company is liable for infringement due to employees’ illegal driving, the employees should be responsible for the losses incurred to the company.
- Risk 2: Insurance claims
If the insured amount of an employee’s vehicle is too low, in the event of a major accident, the insurance may not be able to cover the loss. In addition, some insurance contracts have strict requirements for claims settlement. If the use of an employee’s vehicle does not meet the requirements as stipulated in the insurance contract, such claims may not be settled. Therefore, when the employee is unwilling or unable to assume responsibility, the company may be involved in such liabilities.
Countermeasures: The company could set a minimum amount of the insured amount, and if it is necessary, the company could bear partial of the insurance premium based on the company’s requirement regarding the minimum amount and the company’s operating status. At the same time, the company should regulate the requirements for the use of employees’ vehicles and require employees to comply with the requirements of the insurance contracts, such as whether the insurance has set a restriction requirement regarding the identity of the driver.
- Risk 3: Costs
Under such arrangement, an employee’s vehicle would be used for both company’s usage and personal usage, then how to distinguished costs? In the case (2020) Hu 01 Min Zhong No. 5560, the company dismissed the employee on the grounds that the employee’s application record for going out was inconsistent with the vehicle mileage subsidy record filled in. The court held that, “The employee could provide a reasonable explanation for the inconsistency in the records. The company did not have regulations on the use of employees’ vehicles, in addition, it had reviewed the reimbursement forms and actually reimbursed the mileage allowance.” Finally, the court determined that the company had illegally dismissed.
Countermeasures: The company could clarify the criteria for dividing costs for the two usages in the regulations or agreements. For example, if an employee has registered relevant information in advance, such as the mileage, the specific usage, the usage time and etc., and the company could pay the subsidy based on the mileage. If it is difficult to divide costs, or the company does not want to spend too much time on managing details, it could set a fixed monthly subsidy for using employees’ vehicles.