A survey of small and medium enterprises (SMEs) by Enterprise Rent-A-Car found that, of those businesses that allowed employees to use their own car for work, 40 per cent did no checks at all.

Employers are responsible for ensuring that the so-called ‘grey fleet’ – employee’s own vehicles, used for work purposes – comply with the law. Yet just one in four businesses who allow employees to use their own car bothers to check the vehicle’s suitability.

Perhaps of more concern, employees’ insurance details are not checked by 60 per cent of SMEs, leaving employers open to significant issues and risks.

Rob Ingram, Director of Business Rental at Enterprise Rent-A-Car: “Businesses prepared to let employees drive their own cars for work must begin to understand that they have a responsibility to ensure their employees’ cars are fit for purpose and employees are licensed and insured appropriately.

“That means that they have to face the consequences of any unlicensed drivers or uninsured vehicles. However, many aren’t conducting even the simplest of checks to ensure that their workers’ vehicles are suitable for business use and workers are insured and licensed to drive them.

He added: “This is a tough time for business and every perceived money-saving tactic must look tempting. But it is a false economy to send vehicles onto the road that are not roadworthy and businesses will pay a heavy cost for doing so.

“They should investigate more flexible transport arrangements instead. That way not only do they know they are covered, but their vehicles will be more reliable, which is better for business.”

The survey of more than 400 SME Managing Directors, Partners and Board Members suggested that many already realised the false economy of operating a grey fleet.

In 2009, 42% of employees used their own vehicles for work. One year on, this figure dropped to 28%.

The drop can be attributed to a combination of factors including finding alternative transportation methods and utilising daily rental more frequently.

Ingram said: “Many businesses, when they investigate using car rental to meet their needs, are amazed by the range of services available, the cost reductions that can be achieved and the environmental benefits of using newer, greener vehicles.

“Our figures show that increasing numbers of businesses are realising that there are real alternatives simply to using employees’ cars, with the attendant risks that such a policy brings.”