As more employers implement policies to allow their employees to work from home to protect their health, some important changes need to be made.
Employers introducing work-from-home policies need to revise company policies and duties to satisfy remote employees’ needs. Finance professionals must provide clear rules on employee expenses - what can and cannot be claimed for working from home.
Here’s a look at how to update your business expense policy.
Review your existing policy
If your existing policy doesn’t explicitly cover remote working then it needs to be added and updated. If it does, amendments are likely necessary as working from home becomes a requirement rather than an option.
Reasonable agreements need to be made to ensure that employees are not financially hit by the new arrangements. But they also need to balance the potential cost benefits of workers not having to commute.
Any changes or updates made during your expense policy review should be clearly communicated. They should form a part of a remote working policy guide that covers all of the main employer responsibilities.
What expenses are remote workers allowed to claim?
Homeworkers should be able to claim any additional costs that are incurred solely for business purposes. Expenses that are the same irrespective of where the person is working, should not be included.
The challenge for finance teams in managing remote employee expenses is trying to differentiate between these two categories.
Let’s look at some of the different types of expenses your remote employees can claim for.
If remote working requires additional equipment or furniture to be bought, these costs may need to be reimbursed. This purchase could be an office chair, a first-aid kit, or a software license required for business use.
The case has to be made that these costs are necessary. Most people will already have the basic infrastructure required for remote working - a laptop, desk area, and phone. Employers can also look to transport existing infrastructure to the worker’s home.
Stationery and office resources
If employees don’t have access to a workplace to stock up on paper, envelopes, ink cartridges, etc then these costs need to be covered by an expense policy.
Depending on how long the time remote working policies are going to be in place, employers can also look at the relative costs of sending out office supplies to remote workers.
Heating and electricity
If an employee pays out additional heating and energy costs as a result of remote working, these should be reimbursed. These costs are only legitimate if they are over and above the normal running costs that would be incurred if the person was in the workplace.
If a homeworker’s landline is being used for work calls then costs need to be reimbursed. Itemized bills should help to make sure that business and personal calls are kept apart.
If remote working is for an extended period, employers can consider setting up a designated phone and broadband connection to keep costs completely separate.
For most homeworkers, there will be no additional costs for using their broadband connection for work purposes. Claims may be valid, however, if a service has data limits or data ‘throttling’, where services are reduced above a certain usage level.
Where this is the case, agreements need to be made to determine what is reasonable reimbursement for any additional costs or limitations to a service.
Some home insurance policies will include exemptions for anything that is deemed to be for “business or professional purposes”. For full coverage, a homeworker may need to take out a dedicated business policy.
Any additional costs will need to be reimbursed. Checks need to be made to ensure that any business-owned equipment used by the homeworker, such as a laptop, is not already covered by the employer’s insurance.
What expenses are remote workers not allowed to claim?
Policies for homeworkers should not cover any costs that would be incurred irrespective of where the employee is working at home or in an office. This includes:
- Mortgage payments
- Rental costs
- Property maintenance costs
- Water rates - unless metered
- Food/drink - unless provided free/subsidised in the workplace
How to manage and monitor remote worker expenses
With finance teams also operating remotely, automated expense management tools enable expense processes to continue as normal. Any reliance on paper documents needs to be reduced with claims handled digitally.
A cloud-based approach to expense management allows remote finance teams to continue managing and monitoring costs, with real-time access to submitted claims. A mobile app creates a fully paperless operation.
For finance teams operating a paper-based system, claimants can be given instructions on how to start submitting information digitally. Paper receipts can be converted into digital images using a phone camera and sent as email attachments.
Create or designate a single email address or online storage account where claims can be sent. This will help to keep the process manageable for a remote working finance team.
What are the tax implications of remote working?
As part of the update process, finance teams need to check out how remote employees' expense claims are treated by the relevant tax authorities.
It’s a complex area, with the tax authorities themselves looking to provide clearer guidelines. With home working now no longer simply an optional arrangement for many businesses, it could change the way that expense costs are handled.
Working together - need more help?
As businesses increasingly face unprecedented challenges, this is a time for companies to be working together. If you need any help or advice on adapting your expense process for remote working, we can provide support and guidance.
Learn more about our expense management solution.