Car allowance policy The Company provides car allowances to its employees who are required to use a vehicle to carry out their work for the Company, or according to their role and status. This policy sets out how the allowance is paid, the terms of its provision and the process to follow to make a claim for business mileage. Key responsibilities are outlined below: Employees Be aware that if you are eligible for a car allowance, it will be stated in your contract of employment. If you re eligible for a car allowance: provide documentary evidence when requested by the Company to prove that you have a valid license, MOT and confirm you re insured for business use (not just commuting). Provide a vehicle suitable for business use and provide an alternative vehicle if your vehicle is temporarily off the road and you are required to travel on company business Submit mileage expense claims for all your business miles based on the car allowance mileage rates, available on the HR portal Managers Ensure all your employees who receive a car allowance and drive on company business are eligible and safe to drive Submit any changes to car allowances for your employees (which are not part of a promotion) using the appropriate form via the MSS app available on the HR portal Review and authorise expense claims for your employee s business mileage in line with the travel and subsistence expenses policy Review any high mileage claims received from your employees and where practical consider reorganising your employee s duties to reduce their future mileage If you re required to travel more than 18,000 business miles a year follow the process outlined in the policy and complete a High Mileage Claim Form within the necessary timescale in order to make an additional claim for these miles
Page 2 Contents Contents Driving on company business 3 Driving license and suitability 3 Insurance Provision 3 Inspection 3 Inability to drive 3 Driver development training 3 Eligibility for car allowance 4 Allowance 4 Eligibility 4 Basis of allocation 4 New job need allowance 4 Car allowance rates 4 Level of car allowance 4 Allowance rates 4 Terms of provision 5 High mileage car user compensation 6 Overview 6 Eligibility 6 Compensation 6 Calculation of compensation 6 Compensation payments 6 Claiming compensation 6 Mileage claims 6 Policy 6 Mileage rates 6 Mileage rate calculation 7 Applicable journeys 7 Reducing business mileage 7 Virtual mileage 7 Mileage allowance relief 7 Scope and notes 8 Employees obligations 5 Removal of job need car allowance 5 Part-time employees 5 Maternity, paternity, adoption leave 5 Long-term sickness absence 5 Resignation or dismissal 5 Redundancy, ill health retirement or death 5
Page 3 Car allowance policy Driving on company business Driving license and suitability If a job requires the employee to drive a vehicle in order to undertake their duties, a valid full driving licence must be produced. Only a vehicle which meets the requirements of this policy and the Company s Driving at Work Policy (available from the Health and Safety Intranet) should be used for business travel. For example, motorcycles must not be used for business travel. Insurance Provision Employees must ensure that appropriate insurance cover is provided when using their own vehicle on the Company s business. Inspection As set out in the Driving at Work Policy, employees must: Ensure that the vehicle that they are driving has an MOT (if required), is properly maintained and serviced and is insured for "business use". Present their licence, documentary evidence of their insurance and MOT certificate (if vehicle is over 3 years old) for inspection by their line manager or the HR Service Centre, on request. This would normally be on appointment or transfer to a new position and is not a regular check. * In the event that information obtained from the DVLA is inconsistent with that provided by the employee, or affects the employee s ability to perform their role, managers should raise the matter with the individual concerned and may result in the application of one or more of the Company's HR policies which could include, but is not restricted to, the Disciplinary Procedure or Capability Procedure. Employees failing to produce the above documents may have their Car Allowance suspended until the documents are produced or may otherwise be liable to disciplinary action. Inability to drive If an employee is disqualified from driving by a court or becomes unable to drive because of some injury or disability, they must inform their manager immediately. If an employee has a job where it is necessary to drive in order to carry out their duties and responsibilities, the possession of a valid driving licence is a condition of employment. In these circumstances, loss of a licence may result in disciplinary action. Driver development training All employees driving on Company business should complete on-line driver profiler assessments (available on the Health and Safety Intranet). Employees must discuss the results of their profiler assessment with their manager and together they should agree what Driver Development Training is appropriate and arrange for the training. This approach takes into account the risk that individual drivers are exposed to, considering mileage driven, types of road used and driver experience. Sign a Driving Entitlement Consent Form ( DECF ) giving the Company permission to electronically check their licence details with the DVLA. If a claim for mileage is made and there is no record of a signed mandate, payment will be suspended until it has been received.* Details of Driver Training courses are available on the Health and Safety Intranet under Driving and Road Safety. Defensive driving tuition will be advisable for the majority of drivers in receipt of a Car Allowance. Those drivers with a greater exposure to risk should take advanced driving tuition, leading to the IAM s Advanced Driving Test.
Page 4 Car allowance policy Eligibility for car allowance Allowance Eligible employees will be provided with a taxable cash allowance, paid monthly, that they may use towards funding the provision of a vehicle which will be used for travelling for business purposes. Eligibility Eligibility for the Company Car Allowance is at the discretion of the Company taking into account the following principles: Type of Allowance The allowance is awarded: Each business case will be approved by the Business Director in conjunction with the Local HR Manager. Car allowance rates Level of car allowance The level of Car Allowance is set to enable the employee to properly maintain and insure their vehicle. The Allowance is not intended to cover the full cost of providing a vehicle. As a guide to determining the Allowance, the Company has assumed that the employee will use a Personal Contract Plan arrangement with the maintenance option, although employees may prefer to choose alternatives, such as purchasing a new or second-hand vehicle, provided the Car Allowance terms of provision are met. Job Need Status where an employee is required, by the Company, to have a vehicle to undertake the job and where there is a normal ongoing job requirement to travel in excess of 10,000 business miles a year. This requirement is prorated for part-time employees. to all staff in executive grades L4 to L1 inclusive, where it is considered an appropriate and necessary part of the remuneration package. In addition, the current tax treatment has been factored into the calculation of the Car Allowance which takes into consideration the employee s ability to reclaim monies from HMRC, i.e. the difference between the current Company business mileage rate and that allowable by HMRC under the Approved Mileage Allowance Payments scheme. note: It is the employee s responsibility to claim these monies from HMRC. Allowance rates Basis of allocation The contract of employment will specify whether the Allowance is granted on a Job Need or Status basis. New job need allowance The allocation of a new job need Car Allowance must be supported by a business case, to identify the ongoing business requirement to travel. For existing employees this must include clear evidence, based on six months mileage history where appropriate, that the job need criteria will be met on an ongoing basis. The allowance awarded is based on an employee s grade as indicated in the table below: Grade Executive Grades Annual Allowance L2 9,600 800 L3 8,400 700 L4 7,200 600 Personal Contract and Other Grades PC1/PC2/LEV2 6,000 500 IT3 & IT4 6,000 500 Allowance per month All other grades 4,800 400
Page 5 Car allowance policy Terms of provision Employees obligations An employee who receives a Car Allowance will be obliged to: Hold a full UK driving licence Provide a vehicle suitable for business use* Provide business insurance cover Provide GAP insurance cover (Personal Contract Plan arrangements only) Provide an alternative vehicle, whether through insurance or hired at their own expense, if their vehicle is temporarily off the road and they are required to travel on company business in the UK. Submit business mileage expense claims in line with the company s Travel and Subsistence Expenses policy. * The suitability of the vehicle will be determined by the individual s manager taking account of overall Health and Safety considerations, the operational demands of the employee s role and any impact on the Company s reputation with customers which might arise from identifying the vehicle with the Company or RWE. Removal of job need car allowance Managers will review the circumstances of Job Need employees annually, in conjunction with HR. In the event that the requirement to travel changes on a permanent basis, i.e. if an employee no longer meets the job need criteria for the foreseeable future, then they will no longer be eligible to receive a Car Allowance. Part-time employees Part-time employees who meet the pro-rata job need mileage criteria, or who are eligible to receive a status Car Allowance, will receive the full Car Allowance value appropriate to their grade. Maternity, paternity, adoption leave Employees in receipt of a Car Allowance who take maternity/ paternity/ adoption or shared parental leave will continue to receive the Car Allowance throughout the full period of their leave. Long-term sickness absence Employees in receipt of a Car Allowance who are absent due to long-term sickness absence will continue to receive their full Car Allowance whilst they are in receipt of company sick pay. When an employee exhausts company sick pay, then the Car Allowance will be suspended. Resignation or dismissal If an employee resigns, or is dismissed, from the Company, the Car Allowance will cease with effect from the employee s date of termination. Redundancy, ill health retirement or death in service No compensation will be paid to employees in relation to Car Allowance in the event of redundancy, ill health retirement, normal retirement or death in service. In such circumstances the employee will be given six months notice that the Allowance will cease, during which time the monthly Car Allowance will continue to be paid.
Page 6 Car allowance policy High mileage car user compensation Overview Claiming compensation Claims for high mileage compensation must be submitted annually, relating to the period 1 April to 31 March each year, using the following procedure: A small number of vehicle users within the Company are required to travel significantly in excess of the Job Need mileage criteria. Where this level of mileage is an ongoing job requirement, additional support over and above the monthly Car Allowance is available. Eligibility An employee who travels in excess of 18,000 business miles per annum, between 1 April and 31 March each year. The 18,000 mile threshold may not be pro-rated in order to make a claim for part-year eligibility. Claims will only be accepted where actual mileage exceeds 18,000 in one tax year. Compensation The Company will compensate an employee for the additional mileage incurred as a result of their high business mileage, over and above 18,000 business miles per annum. This compensation is an additional mileage supplement, based on the employee s actual mileage in excess of 18,000 business miles per annum. Calculation of compensation Each year the mileage rate for the additional mileage supplement will be calculated, based on the motoring costs for the period. This rate will be applied to all high mileage claims. Description 1 Employee travels more than 18,000 business miles during period 1 April to 31 March. 2 Employee submits high mileage claim, using the High Mileage Claim Form, detailing total business mileage during the period. 3 Line Manager authorises high mileage claim and submits via HR Query Form for payment. 4 Payroll Team will arrange payment in the next available payroll. 5 Requested payment is grossed up to ensure net amount received is equivalent to high mileage compensation value. High mileage claim forms must be submitted by 31 May each year. High mileage claim forms must be submitted by 31 May each year. (NB: In the event of redundancy, employees who have travelled in excess of 18,000 in the current tax year, but prior to 31 March may submit a claim for high mileage compensation up until their leave date but the 18,000 mile threshold may not be pro-rated in order to make a claim for part-year eligibility.) Mileage claims Policy The Company will reimburse employees in receipt of a Car Allowance for the business mileage that they incur when travelling on business. Compensation payments Compensation payments will be paid via payroll, subject to normal statutory deductions. The actual compensation payment amount paid will be grossed up to ensure the employee receives the full amount of compensation. Mileage rates Mileage rates are reviewed annually and rates are effective from 1 April each year. Mileage rates are paid to reimburse the cost of petrol or diesel, oil and any top-up fluids.
Page 7 Car allowance policy The current reimbursement rates for business miles of employees in receipt of a Car Allowance are contained within the Mileage Rates page on the HR Portal. Mileage rate calculation The mileage rate formula is based on published AA motoring costs and average fuel prices. This mileage rate calculation may mean that rates are reduced as well as increased. Applicable journeys Employees in receipt of Car Allowance may claim mileage for business travel, which is defined as journeys an employee has to make in the course of doing their job. Ordinary commuting travel, between the employee s home and their normal place of work may not be claimed for. Reducing business mileage The Company seeks to encourage environmental practices wherever possible, but this must be balanced against operational requirements. Employees travelling on business journeys are encouraged to use public transport or car sharing wherever possible. Virtual mileage In order to encourage employees with a Job Need Car Allowance to think about the merits of travelling together to meetings without being concerned that the reduction in business mileage may threaten their eligibility for an allowance, such shared journeys may be logged as virtual miles when recording your expenses in ESS. Additionally, to encourage utilisation of existing technology to reduce the need to travel, virtual miles may, in certain circumstances, be taken into account where the need to travel is avoided through the use of video conferencing, subject to prior line management approval. Any virtual miles will be taken into account, in addition to any normal business mileage, in the periodic reviews to assess continued eligibility for job need allowances. Employees with status allowances are also encouraged to share journeys wherever practicable in accordance with the Company s carbon reduction aspirations. Virtual mileage: does not attract any payment cannot be included in any high mileage claim cannot be claimed for journeys where public transport is in any case the obvious common sense approach e.g. travelling to Central London or overseas cannot be claimed for any other journeys where the cost of alternative means of travel exceeds the cost to the Company of a journey by car may not be claimed when a physical meeting is avoided by the use of tele- conferencing or any other techniques as part of ongoing business method change to reduce the need to travel may be claimed when a physical meeting is avoided by the use of video- conferencing providing that such video conferencing is not the normal business practice for holding such meetings Mileage allowance relief The Company expects employees to claim Mileage Allowance Relief under HMRC approved Mileage Allowance Payments scheme for the difference between the Company s rates and HMRC approved Mileage Allowance Payments rates. In order to facilitate making a tax claim to HMRC a detailed log will be required. Employees should maintain their own mileage records and submit claims for Mileage Allowance Relief on their Self- Assessment Income Tax form. The current approved Mileage Allowance Payment rates are 45 pence per mile for the first 10,000 miles in a tax year and 25 pence per mile thereafter. Tax relief is available on the difference between these rates and the amount that the Company pays.
Page 8 Car allowance policy Scope and notes Scope This document applies to employees in the following Innogy Companies in the UK: - Npower Group plc (the UK Retail business) and all its subsidiary companies - Innogy Business Services UK Limited Where the Company is referred to in this document it means any one of the above Companies. Review Version 1.0 (Last updated 01.03.2017) A note on diversity and inclusion We are committed to Diversity and Inclusion. This commitment means that all prospective and current employees will be treated equally and fairly without regard to age, gender reassignment, marriage or civil partnership status, pregnancy and maternity, race, religion or belief, sex, sexual orientation, trade union or, where not relevant to the job status, exoffenders. Staff with disabilities will receive fair treatment and are considered on their ability to do the job following implementation of reasonable adjustments to their role or workplace where appropriate. The Company may review this policy at any time at its discretion and make any necessary changes. Associated documents All associated policies, guidelines, templates and forms mentioned in this document are highlighted and unless specified otherwise are available from the HR Portal. A note on modern slavery The Company is committed to preventing slavery and human trafficking in its corporate activities, and to ensuring that its supply chains are free from slavery and human trafficking. The Company s processes and practices comply with the Company s Code of Conduct which adopts the core values of the United Nations Global Compact which include the elimination of all forms of forced and compulsory labour, and the effective abolition of child labour. The Company uses only reputable employment agencies that have been through a robust selection process to source labour and always verifies the practices of any new agency it is using before accepting workers from that agency.