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Is your expenses policy fit for hybrid work?

Written by Hannah Copeland on 17 January 2022

Amid immeasurable disruption, the money-saving attributes of remote and hybrid work are often hailed as a significant benefit.

Indeed, provisions such as fast food and office attire have largely become redundant in many cases, and this will invariably continue for those remaining in flexible models post-pandemic.

However, the inverse scenario tends to be ignored. While costs are being saved in certain areas, they are, in many cases, being replaced with obligations to pay for things like new equipment, utilities and travel arrangements for sporadic office visits and business trips.

For this reason, employers need to consider whether their approach to remuneration and expenses needs to change.

Do hybrid employees need a designated ‘base’ office?

While the new range of costs associated with remote work is undoubtedly an issue in and of itself, the real challenge is designing an expenses policy for a hybrid workforce.

Much of this centres around travel expenses for occasional office visits and business trips. Naturally, the employee’s proximity to the office can potentially make this complicated and expensive for the employer.

To combat this, every employee must have a statement of terms and conditions of employment. Within this document, there is an essential clause relating to ‘location of work’. This means that it is a requirement to specify where work is being done.

Therefore, a typical hybrid working clause may, for example, refer to the office location as the work base for two days per week and then the employee’s home address for the remainder of the week. If the employee is working fully remotely, however, then the terms and conditions should state this. Typically, pre-pandemic, employees are likely to have a company ‘office’ as their location within their contract.

Claiming expenses will depend upon the expenses policy that the employer has in place. For this reason, it is essential that the employer reviews its expenses policy so that the rules and guidance are clear.

In ordinary circumstances, commuting is not normally covered by expenses, and therefore, unless agreed otherwise, travelling to and from the office will not be expensable.

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What if the employee is much further afield?

The situation arguably gets further complicated when, for instance, the company decides to widen its geographical net for recruitment purposes.

In this situation, they may be left wondering how this impacts the designation of a base workplace if the individual does not live within close proximity to one, and which expenses they can claim.

For this reason, employers must carefully think through the impacts of employing someone who is located far away from the office and what the implications might be for travelling, should the employee be required to visit offices regularly.

It’s best to agree the terms of the employment in advance and put everything in writing so that both parties are clear on what they can and can’t claim. Expenses policies will need reviewing in light of new ways of working.

A similar conundrum arises in the scenario that an existing employee decides to move further away from their base office, an option some employees are taking in light of hybrid work.

Given that this would essentially be the decision of the employee (and unless agreed otherwise with the employer), the employee would continue to be bound by their existing terms and conditions of employment. Entitlement to expenses and business travel would not change and any additional costs created by the move would be borne by the employee (given their choice to move).

What's being done to combat this?

Currently, employers, particularly smaller ones, appear to be dealing with expenses issues on a case-by-case basis. However, this is not necessarily the best approach, and leaves the door open to potential employee relations issues.

Some companies are also choosing to conduct salary benchmarking exercises to understand how the pandemic has impacted pay bands within their industry, while others are focusing on recruitment and looking at how the package they offer to new employees needs to reflect the changing work environment. 

In addition, more companies are considering the validity of regional pay differentials and whether, for a fully remote workforce, this approach is still the best way of allocating salaries.

But whatever the approach, the key tenet is always to consult and communicate with employees, as would be the case with any change you introduce as an employer. Make sure that you have spoken to them, asked their views, and then communicated any changes you make to expenses policies or compensation. If your policies are contractual, you may need to take this a step further and consult formally.

Remember that you cannot simply take it upon yourself to make changes to an employee’s terms and conditions. Any change you propose must have buy-in from the employee, otherwise it is likely to be unfair.

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