Company Car Policy Template in Australia: What to Include and Set Up

Issuing a company car can be a great perk and a practical tool for your team, but without clear ground rules, it can also create legal, safety and tax headaches.

A well-drafted company car policy sets expectations from day one. It explains who can drive, how the vehicle can be used, what happens if there’s an accident or fine, and how you’ll handle data such as GPS logs. Most importantly, it protects your business by showing you take safety and compliance seriously.

In this guide, we’ll walk through what a company car policy should cover in Australia, key legal considerations, and a practical template you can adapt for your small business. We’ll also share how your policy fits with other documents like your Employment Contract and workplace policies so your approach is consistent and enforceable.

What Is A Company Car Policy (And Why Do You Need One)?

A company car policy is a written workplace policy that sets out the conditions for using vehicles owned, leased or otherwise provided by your business.

It’s there to keep people safe, manage costs and reduce risk. It should spell out eligibility, driver standards, permitted personal use, maintenance responsibilities, insurance, reporting obligations, and consequences for breaching the rules.

For small businesses, a clear policy helps you:

• Demonstrate you’ve taken reasonable steps to manage safety (important for WHS obligations).
• Minimise disputes about personal use, fuel, tolls and fines.
• Support ATO record-keeping (e.g. logbooks for FBT and tax purposes).
• Manage privacy and data from telematics or GPS devices.
• Align expectations with your Employment Contract and broader Workplace Policy framework.

It’s also common to pair your policy with a short, signed vehicle assignment or access agreement. If you’re allocating a specific car to a specific employee, consider a dedicated Employee Use of Company Vehicle Agreement alongside your policy.

What Laws Do Australian Employers Need To Consider?

Your policy should reflect Australian law and the practical risks of driving on the job. Key areas include:

Work Health And Safety (WHS)

Vehicles are a workplace when used for work purposes. You have a duty to eliminate or minimise risks so far as reasonably practicable.

Your policy should cover driver fitness (e.g. no driving under the influence), fatigue management, mobile phone use, seatbelt and speed compliance, and expectations for scheduled servicing. Training and induction on the policy are also good practice.

Employment Law And Contracts

Make sure the policy aligns with your Employment Contract terms (e.g. benefits, disciplinary process). Clearly state that the policy forms part of your workplace rules and that breaches may lead to disciplinary action consistent with your HR procedures.

If you allocate vehicles to contractors, ensure your Contractors Agreement covers vehicle access, risk allocation and insurance.

Privacy And GPS/Telematics

If you use GPS tracking or collect data from dashcams or telematics, explain what data you collect, why, who can access it and how long you retain it. This interacts with your Privacy Policy and your obligations under the Privacy Act 1988 (Cth).

Be transparent. Tell employees when and how monitoring occurs and limit use to legitimate business purposes (e.g. safety, asset protection, route optimisation, investigating incidents).

Fringe Benefits Tax (FBT) And ATO Records

Allowing private use of a company car can create FBT obligations. While this is primarily a tax/accounting issue, your policy should set expectations about personal use and logbooks so your records support your chosen FBT calculation method (e.g. statutory formula or operating cost method). Speak with your accountant for tailored tax advice.

Traffic Offences, Fines And Liability

Outline how you will handle speeding or parking fines, toll infringements and penalties for unlicensed or unsafe driving. Your policy should make the responsible driver liable for fines and detail the process for nominating the driver when fines arrive in the company’s name.

Alcohol, Drugs And Mobile Phones

Adopt a clear zero-tolerance approach to impaired driving. Set rules for prescription medication affecting alertness and require disclosure where relevant. For mobile devices, align your car rules with your broader Mobile Phone Policy and Australian road laws.

Insurance And Risk Allocation

Confirm what your company insurance covers, what drivers must do to keep cover valid (e.g. P-plate restrictions, vehicle load limits), and the process to report incidents. Require prompt reporting of accidents or defects and make clear that unauthorised or illegal use may void cover and trigger disciplinary action.

How To Create A Company Car Policy: Step-By-Step

1) Map Your Fleet And Use Cases

List which vehicles you provide (owned, leased, novated lease, hire). Note who will drive them (employees, contractors) and for what tasks. Identify any high-risk use (night driving, long-distance, towing, remote areas). This informs your risk controls and eligibility rules.

2) Decide Your Personal Use Settings

Will you allow any personal use? If yes, define it carefully (e.g. limited personal trips, no ride-sharing or food delivery side jobs, no towing personal trailers without permission). If no personal use is allowed, state that clearly and explain garaging expectations.

3) Align With HR, Privacy And WHS

Check consistency with your Workplace Policy, Privacy Policy and disciplinary procedures. If you maintain a consolidated handbook, plan to add the final policy to your Staff Handbook for easy access.

4) Draft The Policy And Acknowledgement Form

Write the policy with clear, plain language. Add a one-page acknowledgement for staff to sign. If assigning vehicles to named drivers, attach a simple allocation schedule or use a separate company vehicle agreement to capture specifics like odometer, accessories and return condition.

5) Roll Out And Train

Introduce the policy in a team meeting, allow time for questions and collect signed acknowledgements. Provide practical training where appropriate (e.g. how to use dashcams, where to find insurance details). Keep a central, up-to-date copy accessible to all drivers.

6) Monitor And Review

Set a reminder to review the policy annually or after any incident. Update it when your insurance, fleet, technology or legal obligations change.

Company Car Policy Template: Sections To Include

Use the structure below as a practical template you can adapt. Every business is different, so tailor the details to your operations and risks.

1) Purpose And Scope

Explain why the policy exists (safety, compliance, asset protection) and who it applies to (employees, contractors, volunteers) and which vehicles are covered (owned, leased, hire). Clarify that it covers any vehicle driven for work purposes, including pool cars and rentals.

2) Eligibility And Authorisation

• Valid licence requirements (and notification duties if suspended or restricted).
• Minimum experience or age thresholds for certain vehicles (e.g. heavy vans, towing).
• Authorisation process for becoming an approved driver.

3) Use Of Vehicles

• Business use: permitted journeys, booking rules for pool cars, garaging and security requirements.
• Personal use: whether allowed, limits (e.g. reasonable local use), prohibited uses (ride-share, racing, off-road, towing, smoking, pets without permission).
• Passengers: rules for non-employees and children (e.g. child restraint compliance).

4) Driver Responsibilities

• Compliance with road laws, licence conditions, seatbelts and speed limits.
• Mobile phone rules (e.g. hands-free only, no texting, no manual interaction while driving).
• Alcohol and drugs: zero tolerance while driving or within X hours of a shift; prescription medication disclosure where appropriate.
• Fitness to drive: fatigue management, no driving when unwell or excessively tired.

5) Vehicle Care And Maintenance

• Servicing schedule, daily/weekly checks (tyres, lights, fluid levels), and how to report defects.
• Fuel and charge rules (for EVs), acceptable fuel types, and fuel card use (no personal purchases).
• Cleaning and return condition (especially for pool vehicles).

6) Accidents, Incidents And Reporting

• What to do after a crash (ensure safety, contact emergency services, exchange details, take photos, notify your manager and insurer as soon as practicable).
• Reporting timeframes for accidents, near misses and defects.
• Cooperation with investigations and insurer requirements.

7) Insurance

• Overview of company insurance coverage and any excess payable.
• When cover may be void (e.g. unauthorised driver, careless or illegal use).
• Requirement to immediately report any licence suspension or medical condition affecting driving.

8) Fines, Tolls And Parking

• Responsibility for speeding, parking, red light and toll infringements.
• Process for nominating drivers when notices are issued to the company.
• Fuel cards and toll tags: permitted use and no sharing with unauthorised users.

9) Telematics, GPS And Dashcams

• What data is collected (e.g. location, speed, acceleration, braking, video), why and how it’s used.
• Who can access data, and retention and security measures consistent with your Privacy Policy.
• Monitoring transparency and contact details for privacy queries.

10) Records And Logbooks

• When logbooks are required and how to complete them accurately.
• Odometer readings at allocation and return; trip recording expectations.

11) Vehicle Allocation And Return

• Allocation process, collection/return location, and documenting condition at handover.
• Returning keys, fuel cards, toll tags and accessories on request or when employment ends.

12) Breaches And Discipline

• Examples of misconduct (e.g. dangerous driving, repeated fines, unauthorised personal use).
• Potential outcomes (training, loss of vehicle access, repayment of costs, disciplinary action per HR procedures).

13) Variations And Policy Governance

• Right to update the policy and how updates will be communicated.
• Where to find the current version and who to contact with questions.

Appendix: Driver Acknowledgement

Include a short acknowledgment for drivers to sign confirming they’ve read and will comply, and authorising the use of telematics consistent with the policy.

Policy vs Agreement: Do You Need Both?

Many businesses combine a general policy with a short agreement for each vehicle/driver assignment. The policy sets the universal rules. The agreement captures specifics: which car, when issued, fuel card number, any limitations (e.g. no towing), and the condition report.

This two-layer approach can reduce ambiguity and helps with asset tracking and recoveries when staff leave. If you’re formalising an allocation to a senior role, it may also be reflected in their Employment Contract benefits schedule for clarity.

Best Practices To Keep Your Fleet Safe And Compliant

• Keep it simple: Plain-English rules are easier to follow and enforce than complex legal wording.
• Induct every driver: Walk through the policy, give them a one-page quick guide for the glovebox (accident steps, insurer contact, fuel card rules).
• Lead by example: Managers who drive for work should model the behaviours you expect (e.g. phones mounted, no manual interaction).
• Refresh annually: Laws, tech and your insurance settings evolve. Review your policy and re-issue acknowledgements each year.
• Use data responsibly: Leverage telematics to improve safety and reduce costs, but only within the boundaries you’ve explained in your Privacy Policy.
• Document exceptions: If you make an occasional exception (e.g. temporary personal use), put it in writing with an end date to avoid setting a precedent.

How Your Company Car Policy Fits With Other Documents

A company car policy works best when it sits neatly within your broader legal framework:

• Employment Contract: Reference the policy and any vehicle benefit; ensure your position descriptions include any driving requirements.
• Workplace Policies: Keep the car rules consistent with WHS, code of conduct, drugs and alcohol, and mobile phone rules.
• Privacy Policy: Mirror your data collection and monitoring practices, especially if using GPS or dashcams.
• Vehicle Agreement: Use a short allocation document for named vehicles or sensitive roles to lock down the practical details.

If you’re formalising policies and contracts at the same time, it can help to roll them into a coherent pack with an Employee Handbook and the right Employment Contract for each role type.

Common Pitfalls (And How To Avoid Them)

Unclear Personal Use Rules

Ambiguity around personal use creates friction and FBT surprises. Be explicit: either prohibit it, or define the limits and your logbook expectations.

No Process For Fines And Tolls

When fines arrive in the company’s name, delays can add penalties and admin time. Include a clear nomination and repayment process and act quickly when notices arrive.

Inconsistent Application

Special treatment undermines your policy. If you approve exceptions, document them as one-off approvals with a clear end date.

Overlooking Contractors

Contractors using your vehicles bring risk too. Ensure your Contractors Agreement addresses vehicle use, risk allocation, insurance and return obligations, in addition to them signing the policy.

Privacy Gaps With GPS/Dashcams

Tracking without clear notice is a recipe for mistrust and complaints. Explain your monitoring in both the car policy and your Privacy Policy, and restrict use to legitimate business purposes.

Key Takeaways

• A company car policy protects your people and your business by setting clear, practical rules for vehicle use, safety and accountability.
• Cover the essentials: eligibility, permitted use, safety and fitness to drive, maintenance, incidents, fines, insurance, monitoring and logbooks.
• Align your policy with Australian WHS, privacy and employment obligations, and be upfront about GPS/telematics and data handling.
• Pair the policy with an Employee Use of Company Vehicle Agreement when allocating a specific vehicle to a named driver.
• Keep your policy consistent with your Employment Contract, Workplace Policies and Privacy Policy to avoid gaps and confusion.
• Review annually, train your team and document exceptions so your approach stays fair, compliant and easy to manage.

If you’d like a tailored company car policy or a driver agreement for your team, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.