The coronavirus pandemic has impacted almost every aspect of life over the last two years.
For employers and employees alike, the impact of working from home has meant that the way in which expense claims are handled has also changed – and it remains somewhat of a grey area.
While expenses such as travel and lunch have reduced since the onset of remote working, home-based expenses such as heating, and electricity have now risen. Meanwhile, the Omicron variant means that the hybrid return-to-work approach adopted by many businesses is giving way to remote working again.
So, how will things work once some employees begin a full return to the workplace, and others continue remote working?
More pertinently, where will the boundaries lie for expenses to be paid?
There are two main elements to consider in the answer to this question: what you must provide, and what you could provide as a business owner.
Why is there confusion over expenses?
Throughout the pandemic, the government rules and restrictions have changed meaning that people have had to adapt to new ways of working. Some will have started a new job from home, and now be required to go into the office, whereas others may have moved to roles that are 100% remote.
At Loch Associates, we have seen an increase in queries about expenses. Take people who were working remotely and now need to commute into the office: is this a reclaimable expense? (The short answer – it depends on the permanent workplace in their employment contract). How about the ‘expenses’ of homeworking, such as equipment, heating, electricity, phone, and broadband bills?
What do employers have to provide for their employees legally?
Employers should ensure that employees have the tools they need to complete their job effectively – when working from home, this is most likely to be a laptop or computer and potentially a work phone.
If an employee has personal devices that they can use, employers, do not necessarily need to provide an additional company device but should consider if company data can be stored confidential on personal devices.
Employers are also legally obliged to ensure that while working from home reasonable adjustments are made for any employee who has a disability.
What is a legitimate expense post-Covid-19?
Most financial expenses are at the employer’s discretion however, the usual principle is that an employer covers the reasonable expenses that the employee would be expected to incur while carrying out their work.
Common day-to-day legitimate expenses might include
Travel
Employers should consider stipulating a pre-approval process for travel expense claims to attend client or business meetings. An expenses policy should also specify that the most economical means of transport must be used, along with a specific class or category of transport. It should also provide guidance on the use of loyalty cards, fuel cards, and season tickets.
Expenses policies should also specify that employers will not cover penalty fares or fines under most circumstances and will generally not cover the cost of traveling between the employee’s home and their usual place of work. This changes if the employee’s contractual base is at home, and they travel from home.
Accommodation and Subsistence
Again, an expenses policy should stipulate a pre-approval process for expenses covering both accommodation and subsistence. There may be a budget or upper limit enforced, which might be variable depending upon location and accommodation.
Expenses policies should set out what meals can be claimed or provided for with a relevant budget or upper limit or a fixed amount. Expenses should not cover alcohol (or only a very limited amount of alcohol), and should not include entertainment unless the employee is entertaining clients.
Homeworking
When it comes to covering expenses, employers could consider reimbursing a proportion of heating, lighting, and general telephone costs (HMRC permits employers to pay up to £6 per week tax-free – more info in the section below).
Employers could also consider reimbursing the cost of (or providing) any mobile phone or SIM card which is used mainly for business calls. A similar rule applies to other work equipment, such as tablets, computers, office supplies, and office furniture that is used mainly for business purposes.
However, remote working expenses should not cover items used for unrestricted and significant private use or the costs of a major home office refurbishment.
HMRC and working from home expenses
When it comes to managing expenses for those employees working from home, companies vary slightly in their approach. Some will offer more, and some will offer less. However, HMRC states that an employer can pay an employee up to £6 a week (£26 a month for monthly paid employees) to cover additional household expenses while working at home. This allowance is free from tax, so the employee will receive the full sum, and it will be deducted from their taxable income.
Closing Thoughts
With no end in sight to the uncertainty around offices and remote working, and businesses having to be more agile, now is the time to review expenses and benefits, and ensure all your company policies and procedures are fit for purpose.
While providing your employees with certain working from home equipment and perks is not yet obligatory, not doing so could have much greater costs for your company. Employee health, morale, and productivity could all suffer greatly if not addressed – creating problems with poor performance and high turnover down the line.
Author Bio
Pam Loch is the Managing Director and Solicitor at Loch Associates Group. They are HR Consultants in Kent, who can help with managing absences and address these issues by providing management training for managers and supervisors, reviewing, and updating policies, supporting culture change activities, and offering services provided by HR Medical Specialists and Mental Health First Aid trainers.
