Grey fleet policy: Template and practical guide 

If employees use their own cars for work, it's recommended to have a grey fleet policy. It helps your business set expectations for employees, vehicle requirements, mileage records, and employer responsibilities in one clear process.

This guide covers how Australian businesses can create a practical grey fleet policy that supports compliance and day-to-day admin.

Is a grey fleet policy legally required in Australia?

There is no single Australian law that requires a document called a “grey fleet policy.” But under the Work Health and Safety (WHS) Act 2011, employers must take reasonably practicable steps to manage work-related risks — and driving in personal vehicles for work sits inside that obligation.

A written policy is the clearest way to show those steps are being taken. It documents what you expect of drivers, what checks you run, and how work-related driving is reimbursed and recorded. That’s what makes it useful in an audit, an insurance dispute, or an incident investigation.

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Legal and compliance perspective

When an employee drives for work, that activity falls inside your work health and safety obligations. Employers are required to take reasonably practicable steps to manage health and safety risks arising from work, including driving in employee-owned vehicles.

That doesn’t mean you control every aspect of a private vehicle. It does mean a grey fleet shouldn’t sit as an informal arrangement with no checks or documentation.

A policy usually helps you show you have a process to:

• Verify licences and driving eligibility
• Check vehicles are suitable for the work involved
• Require current registration and appropriate insurance
• Communicate safe driving expectations
• Keep records of approvals, declarations, and mileage

A policy doesn’t remove risk — it shows risk is being managed in a structured way.

Practical perspective

A grey fleet policy becomes important as soon as:

• More than a few employees claim work travel
• Managers approve mileage regularly
• The business relies on personal vehicles for site visits, client meetings, or travel between locations

That’s usually when informal processes start to fail. A written policy turns assumptions into a repeatable process.

Why a policy matters

A grey fleet risk is often underestimated because the business doesn’t own the vehicles. But the exposure doesn’t disappear. The main risk areas are straightforward:

• A driver isn’t properly licensed
• A vehicle isn’t maintained or fit for purpose
• Insurance doesn’t reflect business use
• Long or higher-risk trips happen with little oversight
• Records are too weak to support reimbursement, audit, or compliance review

A policy helps you address those issues before an incident, not after one.

What should an Australian grey fleet policy include?

A practical policy covers the same core risk areas every time.

1. Driver eligibility

Set minimum requirements for anyone using a personal vehicle for work:

• A valid and appropriate driver licence for the vehicle class
• A requirement to notify the business of suspensions, restrictions, or relevant offences
• Confirmation the driver is fit to drive and able to complete work travel safely

2. Vehicle suitability and safety

Define what kinds of vehicles are acceptable for work use:

• Roadworthy, registered vehicles
• Minimum safety expectations relevant to the role (for example, working seatbelts, airbags, warning systems; some employers add an ANCAP safety rating minimum for long-distance or high-frequency drivers)
• Restrictions for unsuitable, modified, or high-risk vehicle types where needed

The standard should be “fit for purpose,” not just “technically registered.”

3. Maintenance and roadworthiness

Require employees to keep their vehicle in a safe condition:

• Servicing in line with manufacturer guidance
• Responsibility for basic safety checks (tyres, brakes, lights, fluids)
• A process for reporting and acting on defects or unsafe vehicles

4. Insurance and registration

This is one of the most important areas of a grey fleet policy. The key fact: a standard private-use Comprehensive policy in Australia usually does not automatically cover work-related driving.

Employees need to either confirm with their insurer that business use is included, or add it to the policy (commonly as a “Class 1 Business Use” endorsement, though exact names vary by insurer). Without that confirmation, a claim arising from a work trip can be reduced or refused.

Your policy should require employees to, before any work-related driving:

• Hold current vehicle registration
• Hold insurance that explicitly covers business use (not just private/pleasure)
• Provide written confirmation (a screenshot or Certificate of Currency from their insurer) that their policy covers work-related driving

Where an employee’s existing policy doesn’t cover business use, the policy should make clear that they can’t be reimbursed for work kilometres until cover is updated. That turns a vague expectation into an actionable, enforceable rule.

5. Journey management

A good policy doesn’t assume every trip needs to happen by car. Include guidance on:

• Whether the trip is actually necessary
• Whether a remote meeting, public transport, or another option is more appropriate
• Planning for distance, fatigue, time of day, and road conditions
• 6. Incident reporting and records

Make it clear what must be reported and what records must be kept:

• Crashes, near misses, and vehicle defects
• Licence, registration, and insurance check outcomes
• Trip and mileage records for every work journey
• Signed declarations (for example: a driver’s acknowledgement of the policy at onboarding, annual insurance confirmation, incident reports within 24 hours of an event, and manager approvals for trips over a set distance or duration)

Mileage, reimbursement, and ATO considerations

This area trips up many businesses because it conflates two related but distinct concepts. Spelling them out in the policy keeps finance, payroll, and drivers aligned.

The ATO cents-per-kilometre rate

For the 2025–26 income year, the ATO cents-per-kilometre rate is 88 cents per km for eligible car expense claims under the cents-per-kilometre method. It’s capped at 5,000 business km per car per income year.

Important: this is a tax deduction method that individuals (sole traders, partnerships, and employees) use on their own tax return. It is not a reimbursement rate that employers are required to pay. Employers can choose to reimburse at the ATO rate, above it, or below it.

What the policy should say about reimbursement

For employers, the policy question is: how will business travel be recorded and reimbursed internally?

A practical policy requires a trip record for each work journey, capturing:

• Date
• Business purpose
• Start and end location
• Distance travelled

With proper per-kilometre records tied to actual business travel, reimbursements paid at or below the ATO rate are generally treated as a reimbursement of expenses — not as taxable income to the employee — and are generally FBT-exempt because they cover business use of the employee’s private vehicle.

In short: good records make the reimbursement clean. Weak records push the tax treatment in the wrong direction for everyone involved.

FBT treatment can vary depending on the arrangement (especially where car allowances, novated leases, or mixed-use is involved). If the business wants certainty, confirm the approach with an accountant or payroll specialist — and document the chosen method in the policy so it’s applied consistently.

How to implement a grey fleet policy without adding admin

A policy only works when it fits daily operations, not when it sits in a folder nobody opens.

Make the rules easy to find: Add the policy to onboarding, travel approval workflows, and internal guidance so it’s visible from day one.

Make compliance easy: Use simple submission rules and standard approval steps. When people know exactly what to do, they do it.

Build checks into the process: Set reminders for expiring documents, require current records before reimbursement, and standardise mileage logging across the team.

Consistent mileage tracking is often the single highest-leverage change — it cleans up reimbursement data, strengthens audit trails, and gives managers visibility into how much work-related driving is actually happening.

Review it regularly: Review the policy at least annually, or sooner if travel patterns, payroll processes, or compliance needs change.

Grey fleet policy checklist

Use this as a quick sense-check before publishing or rolling out your policy.

Grey fleet policy template

Download the grey fleet policy template to turn these principles into a usable policy your team can review, adapt, and roll out. 

Pair it with a simple, consistent mileage tracking process so employees log trips accurately and your team has cleaner records for reimbursement, compliance, and day-to-day oversight.

Also read: ATO compliance for your grey fleet 

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