The cost of remote work: Who is footing the bill?

When more businesses decide to embrace remote work as a permanent option, one of the most pressing questions is whether to reimburse employees for home office expenses such as Internet and power. It’s a divisive issue with legal ramifications, but it’s also an important topic.

Reimbursing employees for home office expenses can help attract and retain top talent, as well as boost morale and productivity. However, there are also potential downsides to consider, such as increased overhead costs and the possibility of creating a taxable benefit.

Employees who work from home, on the other hand, face two disadvantages. First, they may earn less money than those who go to their place of business and spend money on gasoline. This is similar to a shift differential for having to be at the workplace. Second, if their home internet connection is not as good as the office’s, they may have a slower connection and be less productive.

The dispute about whether workers should be reimbursed for home office expenses, especially if it’s their choice to work from home, is growing. A 2017 study from the International Workplace Group found that 30% of companies globally offer some type of home office allowance, up from 24% in 2015. The most common expenses that companies reimburse are Internet (59%), followed by home-office equipment (57%), and then electricity (42%). When it comes to deciding whether or not to reimburse, companies must carefully consider the pros and cons. There are a number of pros to reimbursing employees for home office expenses. Perhaps the most obvious is that it can help attract and retain top talent.

Three Different Types of Remote Work Stipends

1. The first type of home office stipend is a fixed monthly amount that employees can use to cover any eligible expenses, such as Internet, phone, and electricity costs. This approach gives employees the flexibility to spend the money as they see fit and can be helpful in attracting and retaining talent.

2. The second type of home office stipend is a reimbursement, where employees submit receipts for eligible expenses and are reimbursed by the company. This approach can help control costs, but it may be more administrative for both employees and employers.

3. The third type of home office stipend is a mix of the first two, where employees are given a fixed monthly amount that can be used to cover some expenses, such as Internet, and are reimbursed for others, such as phone and electricity. This approach can help control costs while still giving employees some flexibility.

There are also a number of potential downsides to consider before implementing a home office stipend program. The first is that it can potentially create a taxable benefit for employees. If the value of the home office stipend exceeds a certain amount, it may be considered a taxable benefit by the government. For example, in Canada, any benefits or allowances paid to an employee that aren’t considered salary or wages are considered taxable benefits.

Another potential downside is that it can increase overhead costs for businesses. The cost of the home office stipend, as well as any additional administrative costs associated with managing the program, will need to be taken into account.

Finally, it’s important to consider whether or not a home office stipend is fair to employees who don’t work from home. Some employees may feel that they are being penalized for not working from home, while others may feel that they are being rewarded for something that is outside of their control.

At the end of the day, the decision of whether or not to reimburse employees for home office expenses comes down to a cost-benefit analysis. Companies must weigh the potential benefits, such as attracting and retaining talent, against the potential costs, such as increased overhead and the potential for creating a taxable benefit.

When making the decision, businesses should weigh the pros and cons carefully and consult with legal counsel to ensure compliance with applicable laws.

Pros:

1. Attract and retain top talent: With more people working remotely, reimbursing home office expenses can help businesses attract and retain the best employees.

2. Boost morale and productivity: Employees who are comfortable working from home are more likely to be productive and have a positive attitude.

3. Increased flexibility: Allowing employees to work from home can make it easier to accommodate different schedules and lifestyles.

4. Save on office space: If more employees work from home, businesses can save on office space and related costs.

Cons:

1. Increased overhead costs: Reimbursing home office expenses can add to a business’s overhead costs.

2. Taxable benefit: If home office expenses are not reimbursed, employees may be able to claim them as a tax deduction.

3. Potentially higher insurance rates: If more employees work from home, businesses may be subject to higher insurance rates.

4. Difficulty monitoring employee productivity: It can be difficult to monitor employee productivity when they are working from home.

Cost of operating a home office has gone up

The cost of operating a home office has gone up in recent years due to the increased cost of living. In addition, the cost of office space has also increased. As a result, businesses are increasingly looking for ways to cut costs. One way to do this is by reimbursing employees for home office expenses.

There are a number of potential advantages to this approach, such as attracting and retaining top talent, boosting morale and productivity, and increased flexibility. However, there are also some potential disadvantages to consider, such as the increased overhead costs and the potential for creating a taxable benefit.

At the end of the day, the decision of whether or not to reimburse employees for home office expenses comes down to a cost-benefit analysis. Companies must weigh the potential benefits, such as attracting and retaining talent, against the potential costs, such as increased overhead and the potential for creating a taxable benefit.

Creative Ways to Spend Your Remote Work Stipend

Once you’ve decided to offer a home office stipend, it’s important to figure out how to spend it in a way that will be most beneficial for your employees. Below are some creative ways to spend your remote work stipend:

1. Invest in ergonomic furniture: One of the best ways to use a home office stipend is to invest in ergonomic furniture. This will help employees stay comfortable and productive while working from home.

2. Buy office supplies: Another great way to use a home office stipend is to buy office supplies. This can include things like notebooks, pens, paper, and printer ink.

3. Invest in a standing desk: A standing desk can help employees stay healthy and productive while working from home.

4. Pay for a co-working space: For employees who need to get out of the house to work, a co-working space can be a great option. The stipend can be used to pay for the membership fee.

5. Give a stipend to charity: Another option is to give the stipend to charity. This can be done by allowing employees to choose which charity they would like the stipend to go to.

6. Offer a stipend for fitness expenses: For employees who want to stay healthy, a stipend for fitness expenses can be a great option. This can be used to pay for things like gym memberships, home workout equipment, or fitness classes.

7. Invest in a work-from-home kit: A work-from-home kit can include things like a noise-cancelling headset, a web camera, and a laptop stand.

8. Pay for childcare: For employees who have children, paying for childcare can be a great way to use the stipend. This will allow them to focus on their work without worrying about their child.

9. Offer a stipend for pet care: For employees who have pets, an allowance for pet care can be a great way to use the stipend. This can be used to pay for things like pet sitting, dog walking, or grooming.

10. Give a stipend for commuting costs: For employees who live far from the office, a stipend for commuting costs can be a great way to use the stipend. This can help offset the cost of gas, public transportation, or car maintenance.

When deciding how to spend your remote work stipend, it’s important to consider the needs of your employees. With the right strategy, you can use the stipend to improve employee productivity and morale.