Almost one year since the ongoing SARS-CoV-2 COVID-19 pandemic changed the way we all live our lives, people all around the world continue to work from home.
Although it’s true that most have settled in and done their best to embrace this “new normal”, it’s rarely a perfect situation—awkward video calls, slap-up dining room offices, and bored children running wild around the home are challenges that many are having to deal with.
While the pandemic is unlikely to mark the end of the office forever, it does look as if we’ll be working from our homes for a while longer yet.
Given that companies have realized that it’s possible to operate remotely and, in fact, that there are many benefits to it, some workers may find themselves working remotely a lot more often, perhaps even permanently.
With all the disruption and uncertainty that has come over the last year, much of the focus has (quite rightly) been on the practicalities of remote working. But there’s a bigger economic picture to it all, and it’s starting to gain more attention as companies think about their long-term plans, leading to questions like “Who’s responsible for funding the move to remote working?” and “Do I need to provide my employees with a remote work allowance?”
In this brief guide, we’re going to cover remote working allowances for employees, what they are, how they work, and why this is increasingly becoming an important part of employee benefits administration. We’ll also touch on work-from-home tax relief and deduction schemes and explain how they differ.
Who Should Pay for a Home Office?
That is the question.
Under normal circumstances, it’s the employer who foots the bill for employee workspaces. Renting an office building, furnishing it with desks, kitting it out with computers, and adding in other comfort facilities are all normal business expenses.
There’s no exception to this when employees are working from home. They still need to be comfortable, sheltered, have access to the Internet, and the equipment necessary to do their jobs. In the long run, they also need a comfortable setup (this doesn’t include dining tables!) such as ergonomic chairs and desks to truly thrive.
With companies now saving huge amounts of money on office space and upkeep and workers spending more on utilities and equipment, shouldn’t the costs be covered by employers?
This is where a remote work allowance comes in.
What is a Remote Work Allowance?
A remote work allowance, or remote work stipend, is a monetary sum paid to employees. It’s designed to help workers cover their expenses while working remotely.
The term ‘remote work allowance’ can also be used to refer to tax deductions that remote employees can claim, but we’ll cover this in more detail later. For now, we’re focusing entirely on remote work allowances in the context of monetary sums paid to workers by employers.
The Hidden Costs of Remote Work
When you look at the cost of remote work, you may be led to think that it’d be much less than it costs your workers to head to the office each day.
After all, remote workers don’t have to pay for transport or refuel their cars as often, and they can wear what they want (when not on video, of course!).
This isn’t quite the case, however. Productive remote work is influenced by several factors that start to pile up the pennies. Laptops and phones, extra monitors, high-speed Internet, desks and comfy chairs, a sustainable working environment, and utility bills are all examples of potential costs.
You also need to factor in the loss of perks and the soft expenses that come with them, such as company-bought lunches, snacks, and coffee. Over time, it all adds up.
These and other expenses are exactly what remote work stipends and allowances are designed to cover.
What Are Remote Work Stipends For?
Remote work allowances can be used for a multitude of reasons. What is and isn’t allowed is a matter for individual company policy.
Typically, remote work stipends are used to fund new office equipment, such as desks, ergonomically designed chairs, and extra monitors. They can also be used to cover costs like food, coffee, or anything else that an employee needs to stay comfortable and productive while working remotely, such as a faster Internet connection or a coworking space membership.
A remote work stipend can be paid monthly alongside salary, quarterly, given as a one-time payment, or as a reimbursement for costs incurred by employees and then claimed for.
Do Employers Need to Offer Remote Work Allowances?
Strictly speaking, no. You don’t need to offer a remote work allowance. But you’d be foolish not to, especially now that the attitude to remote work has changed so dramatically. According to OwlLabs, however, only 20-25% of companies pay or share the cost of remote working expenses like furniture, equipment, and utilities.
Rather than pocketing the money saved when employees go remote, ethical companies understand that their best assets are their people—and it’s in their interests to invest in and look after them.
Similarly, compensation for legitimate work-related expenses is not something that employees should have to surrender for the “privilege” of working from home; they’re entitled to it. Remote working benefits companies just as much as it benefits employees and it shouldn’t be viewed as an employee perk.
While workers shouldn’t be given a remote work stipend for everything—i.e., allowances for non-essential work equipment or lunch every day—certain operational costs absolutely should be covered.
It is worth pointing out that, while remote work allowances are not compulsory, in some countries, such as Spain, it is compulsory to reimburse remote employees for their work-related expenses (whether through a remote work allowance or another method).
Examples of Remote Work Allowances Offered by Real Companies
Since the pandemic saw millions of workers suddenly thrust into home-based remote working, remote work allowances have become more common.
In fact, stipends, which have been described as “The tech industry’s new perk” are offered by most big tech firms. Some even provide stipends for specific costs, such as Basecamp which offers the following remote work allowances for their team members:
Three Benefits of Offering a Remote Work Stipend to Your Employees
Just as companies can benefit from remote work, they can also benefit from offering remote work stipends.
Here are three that stand out: