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Should Employers Pay Employees’ Home Office Costs?

Should Employers Pay Employees’ Home Office Costs?
July 23, 2020 gnuworld
home office costs

Do you think employers should pay employees’ home office costs?

With the COVID-19 pandemic, many companies have been forced to implement work-from-home (WFH) policies.

Increasingly, employees are wondering which home office costs it’s reasonable to expect their employers to cover.

How many employers cover home office costs?

According to a survey conducted by Buffer on remote work practices in 2019, 75% of remote workers said their company doesn’t cover the costs of their home internet.

In addition, 71% said their company doesn’t pay for a coworking space.

While some companies cover these costs partially, only 6% cover them entirely.

Most remote workers pay for internet

Another study involving 1,900 remote workers in 90 countries found that 78% of remote workers pay for their own internet.

According to an Oxford Economics survey, 89% of companies pay their remote workers a stipend to cover cellphone and mobile data costs. This is when the employee uses his or her own device.

Airtime, data costs and device purchases are covered by 58% of companies.

Companies funding home office costs due to COVID-19

Some companies have been helping remote workers adapt to the new and sudden WFH policies by providing stipends.

These are to help employees set up a comfortable workspace, buy essential equipment and ensure they have a reliable internet connection.

Stipends are temporary

However, these stipends or grants are a temporary measure due to the surge in employees having to work from home.

They don’t necessarily reflect future obligations of companies.

Distinction between voluntary and required work from home

Many remote workers gladly absorb costs involved in working from home because they prefer to work there and can save money in other areas, such as transport and clothing.

But when WFH policies are enforced, it raises the question of legal obligations.

In the US, some states require a company to reimburse WFH expenses when the order is mandatory, as has occurred due to the pandemic.

This reimbursement covers items that would normally be supplied in the office.

Most commonly reimbursed home office expenses

If an employee is required to work from home during the COVID-19 pandemic but isn’t set up for it, then he or she won’t have access to services and equipment necessary to do their jobs.

These services and equipment are usually reimbursed or provided upfront. They include:

  • cellphone expenses including data
  • landline expenses
  • internet costs or partial reimbursement
  • a laptop or tablet
  • communication software (such as Zoom or Slack) or hardware (headsets, webcams)
  • office furniture, such as a desk or ergonomic office chair.

Home office expenses: the case in South Africa

In South Africa, there’s no law requiring companies to reimburse employees for WFH expenses.

In the interests of productivity, many companies have chosen to reimburse employees.

If a company chooses to cover WFH costs, there are various tax considerations to be aware of.

Advances or lump-sum amounts towards home office expenses are fully taxable and can’t be deducted as business expenses.

It’s preferable for employees to cover these costs upfront and then apply for reimbursement for individual business-related expenses.

It’s also worth noting that employees have to work from home for 50% or more of the tax year to qualify for home office tax deductions on their personal income tax.

Employees who worked from home for less than six months during lockdown won’t qualify for deductions.

How The Workspace can help

At The Workspace, we’re trying to help businesses and entrepreneurs bounce back.

Sign up for a serviced office for six months and you’ll get the first month free – plus 10% off your office rental for the second and third months.

If you have questions about renting office or coworking space during any lockdown level, please contact us on 0861 250 259 or contact us online. Read more about our COVID-19 safety measures here.

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