Homeworker Payments

The continuing Covid-19 pandemic and ensuing lockdown have forced many businesses to ask their staff to work remotely from home. Rather than being the disaster the majority of businesses feared, many of those businesses have found the change revelatory and have noticed little change to the level of productivity or the engagement of staff. The massive strides in communication and collaborative working technology over recent years have made this mode of working more than viable. A significant proportion of organisations are now coming to this realisation and we have been asked by a number of our clients how they will need to modify staff reward packages to reflect this alternate way of working.

Considerations

There are a number of factors to consider when moving staff from office to homeworking: 

• What proportion of time will they work from home? 
  • Do you want them to come into the office once a week, just for meetings, three out of five days? 
• What equipment, technology are they going to need to work remotely?
  • Computer, mobile phone, printer, broadband?
• Does your insurance cover homeworkers?
• Are they allowed to homework under their home insurance, rental agreement, mortgage etc?

When you have an understanding of how you wish your homeworking arrangements to be structured, you can begin to think about the changes you will need to make to your current reward processes to ensure that they reflect this new working arrangement. There are going to be benefits that you currently have in place which may be less relevant to staff not coming into the office every day, for example free membership of the gym next to the office is a less attractive benefit if you happen to live and work 10 miles away, as are free meals in the staff canteen or free parking. However other benefits are going to be far more relevant – provision of a mobile phone, laptop, decent internet connection, flexible working hours, and social events to give just a few examples.

You also need to consider how you structure these benefits as there may well be tax implications for both the organisation and the individual. The HMRC currently allows organisations to pay up to £6 a week towards an individual’s additional costs for working at home e.g. additional heating, lighting, water etc without the need for this to be declared. For any payments made over and above this the organisation needs to be able to demonstrate, with evidence, that the payment being made does not exceed the additional expense being incurred by the individual. Any payments in excess of the £6 a week that cannot be attributed to additional costs must be declared as additional income for that individual and taxed accordingly.

 A similar regime is in operation in relation to the equipment you supply your staff to enable them to work from home. Equipment supplied to enable homeworking that is solely used for that purpose or where any non-work use is ‘insignificant’ does not need to be declared and is not classed as a benefit for tax purposes. However, if the supplied equipment is also being used for non-work reasons a portion of its value is seen as a benefit and should be taxed accordingly.

Payments

Taking the previous section into consideration, what would we consider a reasonable level of additional payments for those working at home? First off, using an individual carrying out general office work at home, we would suggest the following:

• Provision of a work only laptop, we are assuming that the individual already has broadband access (Government figures published in 2019 showed that 91% of homes had fixed broadband access).
• Provision of a work only mobile phone or access to Skype or equivalent.
• Provision of any other equipment they require to work remotely, printer, monitors etc.
• A payment of £6 a week to offset any additional household expenses related to them having to work at home.

In addition, it is worth considering whether any of the benefits which have now become less relevant, gym membership, online canteen etc can be replaced by similar more pertinent alternatives.

Conclusion

As someone who has worked from home for more than a decade, there are real gains to be had for both employees and employers as well as the larger environmental benefits. Employees gain valuable time where they would have been travelling, and for those with young families the ability to spend more time at home is priceless. Employers have the opportunity to make significant savings downsizing their offices, their need for parking space, electricity, heating etc and, if managed correctly, they may find overall productivity increasing as staff move to working patterns that better suit them.

As a final thought, employers may wish to consider redistributing some of the savings they make from downsizing their offices to increase the salaries of those working from home as an incentive to do so.