Insights into global expansion & employee retention

Published: June 9, 2022

What is an Employee Working from Home Allowance?

Even as we emerge from the pandemic, there will be hangover effects from the societal shift that ripple throughout the entire global workforce, impacting the way businesses operate. While some behaviors and practices will be shed, others will be cemented in modern workplace culture.
What Is an Employee Working From Home Allowance Guide

Key Points Summary

  • To accommodate remote work’s rise, companies adopt ‘working from home allowances’ for employee home office costs.
  • These allowances cover varied expenses, meeting legal requirements and benefiting engagement, talent attraction, and productivity.
  • Playroll’s services aid businesses in navigating stipend laws and ensuring effective ‘working from home allowance’ implementation.

As remote work continues to reshape the way we approach our professional lives, understanding the nuances of this innovative concept becomes essential. Join us as we explore the ins and outs of this empowering practice, unraveling its benefits, legal implications, and the strategic insights it offers to both employers and employees. Whether you’re a remote work enthusiast or an HR professional seeking to optimize your workforce strategy, this article is your gateway to unraveling the possibilities and potential of the Employee Working From Home Allowance.

What Is a Remote Worker Stipend? 

The concept of an employee working from home allowance is precisely as its name suggests: it involves a fixed monetary sum or a package of benefits that is provided on top of the standard base rate salary. This additional compensation is ideally intended to address the supplementary financial burdens that employees encounter while transforming their homes into fully functional remote offices. These costs encompass a spectrum, ranging from procuring essential office supplies and equipment to managing escalated utility bills due to increased home usage.

Interestingly, certain European countries have taken this notion a step further by enacting specific legal provisions that even encompass the minutiae of these additional expenses. A noteworthy instance can be observed in the Netherlands, where Dutch civil servants benefit from an extra daily allocation of two euros, facilitated by their global HR division. This particular stipend is designed to offset minor yet recurring expenditures such as coffee and toilet paper, further exemplifying the comprehensive approach some countries adopt regarding remote work allowances.

In addition to straight cash remuneration, various companies have decided to reward remote employees in creative ways with their working from home allowances, such as:

Beyond the straightforward provision of monetary compensation, numerous forward-thinking companies have adopted innovative approaches to reward their remote workforce through the ‘working from home allowance.’ These inventive methods encompass a range of benefits that extend beyond traditional cash remuneration. Examples include:

  • Coworking space stipend
  • Fitness allowance
  • Health and wellness stipend
  • Budget for a workstation setup
  • Continuous learning stipend
  • Internet reimbursement 
  • Coffee and meal stipend  

This evolving landscape of creative rewards underscores the dynamic nature of ‘working from home allowances’ and their potential to enhance employee satisfaction and productivity. 

Employee Looking at His Working from Home Allowance Details

Are Employee Working Remotely Allowances Legally Required?  

The answer to this depends on where your business operates. 

In the U.S., there aren’t any federal employment laws that require employers to cover remote work expenses. However, some states created laws that did compel some form of compensation. 

For instance, the California Labor Code Section 2802 states that an employee is entitled to reimbursement “by his or her employer for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” So, if the role doesn’t provide the option to work in person, the law applies. 

Outside of the U.S., most countries require some employee reimbursement of reasonable costs associated with remote employees. What that entails, however, may differ from one locale to another. In many cases, there are no remote work allowance requirements, but there are provisions for tax relief and tax deductions. For instance: 

  • Australia – Employees may have the opportunity to deduct expenses that aren’t reimbursed from their taxable income, benefiting from a swift fixed-rate tax deduction of 80 cents per hour worked from home. This ‘working from home allowance’ offers a valuable means of expense relief for remote workers.
  • Belgium – The home work allowance is commensurate to professional costs linked to working from home, so long as it doesn’t exceed 10% of gross pay. 
  • Canada – Employees working from home can claim deductions from expenses associated with remote work, so long as the employers complete a T-2200 Declaration of Employment form.
  • France – Any equipment required for work and costs incurred in relation to work must be borne by the employer. They must also pay a monthly telework allowance for using their private space for a business activity based on the proportion of the home occupied by business equipment.  
  • Spain – Companies have to bankroll all employee business expense occurrences including equipment, furniture and utilities. 
  • The U.K. – The United Kingdom doesn’t have laws on the books that compel action. However, the salary and benefits packages must be the same as a comparable office worker. 

3 Benefits of Working from Home Allowance 

Even if it’s not legally required, providing your employees with a work from home allowance is simply good business sense. Benefits of offering a remote work stipend include: 

  • Improved employee engagement and retention – Enhanced employee engagement and retention are direct outcomes of a remote work stipend, exemplifying how businesses can demonstrate appreciation and value towards their workforce. Happy and acknowledged employees are naturally more content with their roles, reducing the likelihood of seeking opportunities elsewhere and contributing to a stable and motivated team.
  • Attracting top talent – How do you get an edge over your competitors in a cutthroat hiring market? In the remote interview process, Offering perks like working from home and an allowance on top of that could be the deciding factor that tips the scales and makes a talented employee choose your firm. 
  • Increased productivity – The relationship between a conducive work environment and heightened productivity is undeniable. By investing in optimized office setups, businesses empower employees to excel by eliminating distractions and creating tailored spaces that amplify focus and innovation. This strategic commitment not only drives efficiency but also communicates a genuine regard for employee well-being, fostering motivation, job satisfaction, and a harmonious blend of workspace and task.

Payroll: Employee Allowances Made Simple 

Looking ahead, the concept of remote work is poised to establish itself as a lasting element of the business landscape, taking on various forms. Research conducted by Ladders indicates that by the close of 2022, around 25% of professional roles in the U.S. will incorporate remote work to some degree, with even more remote opportunities predicted to arise in 2023. This anticipated shift underscores the significance of the ‘working from home allowance’ as a relevant and essential aspect of modern employment trends. 

Knowing this, businesses must act accordingly, especially if they operate in a place that has remote work stipend laws on its books. If you need help setting up your work from home allowance program or want to know how to operate in accordance with your company’s country-specific laws, you’re in the right place. 

At Playroll, you can enjoy ready-made employer of record services and work stipend management. Get started with our demo today to see our simplified payroll solutions services (including a payment management system) in action.

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