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WFH allowance: the financial push that changes everything

Published:

October 16, 2023

Updated:

November 16, 2023

What do Google and deskbird have in common? We both provide a WFH allowance to our hybrid teams

Why do we do that? This is what we are about to discuss in this article.

You all know that our ways of working have changed over the last couple of years. Enabling your staff to work from anywhere has become essential to meeting their expectations, promoting a people-centric work environment, enhancing employee satisfaction, and boosting talent attraction.

Yet, while hybrid work models reduce office costs, they increase remote work expenses like electricity and Internet bills, home office equipment, and co-working fees. Covering this spending fully or partially is another great way to support your team members. 

But this is not the only reason to offer a work-from-home stipend. This financial push has a domino effect that also creates positive outcomes for your business.

Do you want to know more about how to compensate your coworkers in a hybrid work setup? From the types of WFH allowances to the eligible expenses and the development of a WFH stipend policy, we’ve got you covered!

woman working from home at her laptop

What is the purpose of a work-from-home stipend?

Definition of a work-from-home stipend

A work-from-home stipend is a money allowance companies give to their remote team members. The objective is to compensate for extra costs from working outside the office, whether at home or in a third workplace. 

On the one hand, introducing a hybrid work model enables businesses to decrease various charges, from office rent to electricity bills, for instance. But, on the other hand, it increases expenses for employees. Although they might save on commuting, working from home implies a higher energy consumption, better Internet connection, more ergonomic furniture, etc. 

These are all examples of what a WFH stipend can cover. However, the impact of providing a home-office allowance goes beyond a financial perk. Before talking about the benefits, let’s see how this works in practice.

Ways to offer a WFH stipend

Organizations can decide to provide this compensation in various formats. The most common ways to offer a WFH stipend go under these three arrangements:

  • a monthly allowance;
  • a one-time payment;
  • expenses reimbursement.

How you do it must match your situation and request some calculations as well as planning. Some companies also differentiate the configuration of home-office allowance according to the type of contract of their team members (part-time, full-time, freelance, etc.) or the living location, which helps comply with state and country requirements.

Also, considering your employees’ preferences is important. Filling and sending expense reimbursement forms every month might not be the most convenient and efficient option. Yet, if it works for you and your staff, that’s what matters. Remember, the backbone of a people-centric mindset is implementing tailored approaches for your workforce, and nobody else’s. 

The tax situation regarding remote work allowances

According to the country of residence of your employees, remote work allowance can be taxable. However, most of the time, stipends are chargeable income. 

However, in the U.S., workers who fill out a refund form are not taxed on this amount as soon as it is part of the reimbursement program and goes under the category of eligible expenses. In Europe, many countries have implemented a tax write-off procedure for remote team members over the last few years. 

💡 Read our remote work tax deduction article to learn more about how the American and European tax systems adapt to these new ways of working.

woman working from a coffee shop

Why should you give a WFH stipend to your hybrid employees?

WFH allowances enhance employee satisfaction

Flexible work provides benefits for both companies and employees. Yet, it tends to decrease office charges (rent, bills, equipment, etc.) while increasing expenses for workers (electricity, Internet, hardware, etc.). There is no doubt that your staff will appreciate a little financial push to compensate for the costs of working remotely.

Offering a WFH allowance shows that your team members matter to you. You want to provide what is best for them because you know a happy and satisfied workforce is the key to success. Not only does it boost workers’ morale, but it also enhances engagement and productivity.

Work-from-home stipends align with a people-centric corporate culture

Corporate culture has a crucial role in the workplace. It holds people together and stimulates them to head toward similar goals. Employee-centric approaches benefit businesses in many ways and can take multiple forms. The most important one is support. 

Helping your team members is key to giving them the best chances to thrive. This implies listening to their needs and answering their expectations. It can be through offering training opportunities, encouraging them to innovate, implementing well-being initiatives, promoting DEI practices, etc.

Providing them with a WFH stipend supports them financially and improves equity and inclusion in the workplace. All employees should have access to similar resources to work from home comfortably and efficiently. 

woman talking at the phone

Home-office stipends contribute to employee well-being and productivity

Remote work allowances help cover additional costs resulting from home office, like an increase in electricity consumption and the necessity for a better Internet subscription. 

However, it can also enable employees to design a dedicated workspace at home that matches their needs. For example, promoting ergonomic practices in the workplace doesn’t stop at your building’s doorstep. Their work setting at home must be as comfortable and thriving as the one in the office.

Whether it is a height-adjustable desk or a faster Internet connection, WFH stipends can significantly impact your staff performance as they can improve their well-being and productivity.

🎬 Do you want to learn more about our mission and how we can support your hybrid work environment? Discover the features of the deskbird app in our less than 2-minute video!

Remote work allowances boost your reputation and attract talent

Organizations that focus on improving employee satisfaction, promoting a people-centric culture, and enhancing well-being at work usually tend to have better reputations than those that don’t. Introducing WFH allowances also shows how modern your mindset is and how ready you are to adapt to the trends of the future of work. 

Simultaneously, it boosts your company’s image and lowers turnover. 

The job market situation is tense. Flexible work opportunities are now one of the top priorities for professionals. On top of being one more reason for people to stay by your side, this people-first approach can also help you attract talent. But offering a work-from-home stipend gives you an even more powerful advantage in comparison to your competitors.

Which expenses does a remote work allowance cover?

Utility bills and soft expenses

As they are more often at home and less on-site, your remote employees see their personal bills increase. You usually save money on rent and other office costs, and they have to spend more. This isn’t really fair, is it? A WFH allowance helps them financially to compensate for these additional costs. It can cover expenses such as:

  • electricity and utilities;
  • high-speed Internet;
  • cellphone subscriptions;
  • lunch allowance;
  • etc.

Home office hardware

When enabling flexible work arrangements, you want your team members to evolve in work environments as optimal as when they come to the office. Yet, not everybody can afford to buy or replace new furniture and equipment. Thanks to a WFH allowance, they can create the workspace they need to thrive. It means access to the hardware they require to maintain a high level of productivity. A home-office stipend provides money for resources like: 

  • ergonomic furniture;
  • lighting;
  • laptop, tablet, cellphone;
  • noise-cancellation headphones;
  • computer accessories (keyboard, mouse, etc.).

🧑💻 Do you consider implementing a Bring Your Own Device policy? Learn the advantages and disadvantages of BYOD first!

women working from a co-working space

Co-working space subscription

It is also quite common for organizations that give remote work compensation to pay the fees for a spot in a co-working space. For various reasons, not everyone can work from home. Enabling your hybrid employees to work in the best environment by supporting them financially is crucial to maintaining high performance and satisfaction. 

According to your WFH allowance policy and your budget, you can either: 

  • Collaborate with co-working spaces around the areas where your staff live to get good deals.
  • Pay the entire amount of the registration fees.
  • Cover a certain percentage only. 

How do you implement a work-from-home stipend?

Discuss with other managers and employees

The first step is to discuss the terms and conditions of your home-office stipend with other managers and workers. Which remote work expenses shall it cover? What would be a fair amount? Which form shall it take (reimbursement, monthly allowance, one-time stipend)? People from distinct departments, positions, and personal situations might trigger different answers to these questions.

To create a financial support system for hybrid employees that is fair and balanced, getting their feedback is fundamental to understanding their needs and expectations. Especially if you don’t have a big budget to compensate for remote work costs, knowing what would be the most helpful to your staff is key in order to prioritize. 

Calculate your WFH stipend

The second step is to determine if you are financially able to do it and, if so, how much you can cover. We recommend you try not to consider WFH allowances as a cost but to see it as a long-term investment. Remember, it enhances employee satisfaction, promotes a people-first culture, fosters well-being, boosts productivity, improves your reputation, and attracts talent. All these aspects are undeniably worth it. They are essential to add more value and grow your business in the long run.

Have you ever measured how much you can save by letting your staff work from home a few days a week or a month? If not, use our hybrid office calculator to discover where to reduce your costs and how much you can save. You can maybe then redirect this amount of money to create WFH stipends!

📆 Start a free trial of the deskbird app to give your employees more flexibility with workspace booking and week planning while saving costs!

Create a remote work stipend policy

The third step is to make sure everyone is aligned with this new concept and understands how it works. To do so, designing a remote work stipend policy is a must. It should include all the answers to the workforce's questions, such as:

  • List the type of expenses covered.
  • Indicate the maximum amount covered and for which period (monthly or yearly).
  • Explain the refund process if you decide to support your team members by allowing them to get a reimbursement for the costs related to remote work.
  • Describe in detail any specific cases if your home-office stipend system is based on different criteria (job position, country of residence, type of contract, etc.).

Lastly, keep your WFH allowance policy flexible. Your workers’ needs might change, and so does your situation. 

By offering WFH allowances, you take a stand regarding employee centricity and your wish to provide the best working conditions for your workforce. On top of embracing modern ways of working and implementing flexible work arrangements, you support your team members financially. Work-from-home stipends not only compensate for additional costs related to remote work but also enable your staff to create an optimal work environment at home

Although the goal is to help your coworkers, this approach also benefits you as a company. Employees are more satisfied with their employers and can work in better conditions, contributing to greater engagement, productivity, retention, and attraction.

Before you close this article, we have a last question: Is your hybrid setup 100% smooth and optimized?

If not, request a free demo of the deskbird app to discover how we support you during your hybrid journey, help you save costs, and boost your employee experience!

Sources:

WFH allowance: the financial push that changes everything

Paulyne Sombret

Paulyne is a highly respected expert in hybrid work. She's known for her writing on sustainability in the hybrid office, flexible work models, and employee experience. With a strong background in content and SEO, her work explores the exciting trends and latest news in the world of work.

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