As organizations around the world embrace flexible work models, many have also
begun to implement policies and procedures for managing their remote
workforce and ensuring fairness and compliance in hiring and
compensation.
For many companies, this means offering working from home allowances. Here’s
what you need to know about this benefit in various countries (which, in some
cases, it’s even mandated) and tips for adding it to compensation packages.
The U.S.
Currently, the U.S. doesn’t have any federal law that requires employers to
reimburse employees for home office expenses. However, some states have their
own laws. For example, in Illinois, the Wage Payment and Collection Act
requires that employers reimburse employees “for all necessary expenditures or
losses incurred by the employee within the employee's scope of employment and
directly related to services performed for the employer.”
In this case, cell phone and internet expenses may be classified as
necessary expenditures. However, to qualify for reimbursement, the remote
employee must make a request within 30 calendar days of the date the
additional expense was incurred.
Even if it’s not legally required, many companies are still opting to offer
home allowances as a competitive perk. For instance, according to COMPT:
HubSpot:
- $60/month tax-free remote work stipend
Facebook:
- $1,000 cash bonus to work from home
Webflow:
- $250/month for remote workers
- $200/month (for everyone) health and wellness stipend
- $1,000/year (for everyone) continuous learning stipend
Basecamp:
- $100/month coworking space stipend
- $100/month fitness allowance
- $100/month message allowance
- $1,000 for workstation setup
Canada
In response to the COVID-19 pandemic, _Canada allowed employees to claim at-
home expenses _ as
deductions on their personal income tax returns. So long as they worked from
home for more than half the time or at least four consecutive weeks, they’re
eligible to take $2 for each day they had to work from home, with a $400
maximum in tax relief.
Similarly, Canada’s Revenue Agency (CRA), won’t consider an employee to receive a taxable benefit where their employer pays for or
reimburses up to $500 of computer or home office equipment, as long as the
employee submits receipts to the employer.
Finally, the Income Tax Act dictates
that remote employees who have to pay for work-related expenses, such as those
related to a home office, may be able to write off things like:
- Electricity
- Heat
- Water
- Utilities
- Home internet access fees
- Maintenance and minor repair costs
- Rent paid for a house or apartment where you live
- Office supplies and phone expenses
Australia
The Australian government created a home allowance
that’s tantamount to a tax deduction. For every hour of work a remote employee
completes, they’re legally allowed to claim between .52 and .80 AUD in tax
deductions. Additionally, they can separately claim the work-related portion
of utility and equipment expenses, including:
- Phone and internet expenses
- Home office equipment and furnishing (up to $300 AUD)
- Computer depreciation
- Cleaning costs for dedicated work area
Some Australian companies have provided additional benefits for remote
workers. For example, employees of the Australian health insurer Nib Group
receive a $1,200 AUD allowance to cover their work from home costs.
The U.K.
In the United Kingdom, employers are not obligated to provide the equipment
employees need to work. However, there are some key legal considerations employers must consider or else face a potential
discrimination suit:
- Salary and benefits packages provided to remote workers must be the same as a comparable office worker.
- Women are more likely to request remote work arrangements than men. As such, if her request is rejected, a woman could potentially file for indirect sex discrimination unless the decision can be justified.
- For disabled workers, the employer is expected to make reasonable adjustments to support them.
Spain
Spain was one of the first countries to require employers to cover the home
working expenses of their employees. Royal Decree No. 28/202
0,
which regulates remote work in Spain, includes a provision for equipment
costs. Specifically, companies must pay for tools and resources employees need
to perform their work.
These benefits would apply to employees who stay home for at least a third of
their work schedule. Employers have the right to monitor their workers’ online
presence, so long as they respect the worker’s dignity and privacy.
A home office agreement must be formalized and agreed to in writing by both
the employer and employee. It must be an individual and voluntary decision by
the worker.
The Netherlands
Employers in The Netherlands can provide employees with a daily tax-free €2 remote work allowance , which is reimbursed by the
government.
If an employee and employer have a written agreement for the days worked from
home, they then qualify for the remote work allowance. However, this allowance
isn’t mandatory.
Considerations for remote work allowances
Even if the country where your remote workers live doesn’t require you to make
a home allowance, many companies choose to offer one to help make them more
competitive as an employer. When formulating an allowance as part of a
compensation package, consider the following:
Hidden costs of working from home
Although there are many benefits of remote work, it also has some hidden
costs, especially for employees. For example, a Dutch study
cited extra costs
like higher electric, water and gas bills, not to mention little expenses like
toilet paper, tea or coffee. Then there are more obvious costs like home
office setup, connectivity and maintenance. As Cheryl Munk of Forbes writes:
“Employees may be incurring the costs of basic office supplies (think ink
cartridges) and they may even be purchasing desks, chairs, monitors and other
critical office items. Then there are even more under-the-surface
expenses—like the potential cost of increased wear and tear on employees’
personal technology devices.”
Employment laws
International companies may have to worry about legal requirements for
allowances in some locations, but not in others. Familiarity with and
compliance to the regulations of each location where you have remote workers
could help you avoid costly fines or penalties.
Regardless of whether any type of remote allowance is legally required, try
and create a remote-worker compensation package that will be fair no matter
what country you operate from.
Alternative benefits
Direct monetary payments aren’t the only ways to compensate and support remote
employees. Consider creating a package that includes some of these alternative
benefits, including:
- Health and wellness days
- Meals
- Office equipment
- Educational assistance and management training
- Health club memberships
A work from home allowance program—and beyond
Providing a work from home allowance program can show your commitment to your
employees and provide your company with a competitive edge as an employer. But
it’s important be clear of any rules for allowances in all the countries where
you have remote workers—and in the countries where you’re seeking new talent.
As you expand your remote workforce, a global employment solutions provider can advise you not only on
working from home allowances, but other HR and payroll considerations in
countries around the world. Have a specific question about employing or paying
your international remote workers? Contact us to speak with a global
solutions advisor today .
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