As an HR manager, it is your responsibility to find the optimal balance between optimum employee productivity and job satisfaction. But achieving this during the Great Resignation era, where a significant portion of the workforce is quitting their jobs due to work-related stress and anxiety, can be a considerable challenge. According to a MetLife report on job satisfaction, employee burnout and stress levels are at an all-time high. A practical solution is implementing wellness and fringe benefits policies like a travel stipend policy encouraging employees to use their paid time off for personal travel without fretting over finances.
You might think, what does your company gain by setting up an employee travel stipend policy? Companies with an employee travel stipend policy have higher talent retention and employee engagement levels. Besides, there is a significant gap in job fulfillment and overall well-being between employees who take regular paid leave to travel and those who don’t. IncentFit’s guide to employee travel stipend policies offers crucial information on developing one for your company. Continue reading to learn more about the process, what to offer, the benefits, tax implications, and much more.
- What is a Travel Stipend?
- What is a Travel Stipend Policy?
- What does a Travel Stipend cover?
- When should you offer a Travel Stipend Policy to employees?
- Which employees should you offer a Travel Stipend to?
- What are the benefits of offering a Travel Stipend Policy at your company?
- What are the tax implications of travel stipends?
- 5 Examples of Travel Stipends offered by Employers
- How to Offer an Employee Travel stipend Policy at your Company
What is a Travel Stipend?
A travel stipend is a cash benefit companies provide for their employees’ personal travel expenses within a calendar year. Also known as a vacation stipend or travel reimbursement, workers can use the fixed amount to cover part, but not all, of their personal travel costs.
You should understand that a travel stipend only covers an employee’s personal travel costs instead of business-related travel expenses. As a result, a travel stipend is designed to reimburse part of an employee’s vacation expenses and is not intended to fund the entire trip.
There is little doubt that HR managers will have a huge challenge getting company boards to agree on offering employee travel stipends. An excellent solution is providing examples of several companies offering travel stipend perks that enrich the employee experience.
What is a Travel Stipend Policy?
A travel stipend policy is a set of guidelines on how employees can assess and use their company’s travel stipend for personal travel/vacation expenses. Since every company has a distinct corporate culture, the scope of a well-defined travel stipend policy should match the particular company’s needs and the employee’s expectations. It means creating an affordable and flexible travel reimbursement policy with efficient cost-management systems while offering employees the liberty to travel and spend with confidence.
Having an effective travel stipend policy in place involves collaboration between the Human Resources and Finance departments to ensure efficient expense data collection, updated payment records, compliance with existing law, and effective employee communication channels.
A corporate employee travel stipend policy will provide comprehensive details on international and domestic travel benefits. And it typically contains information on the following,
1. Guidelines on how the company offers the travel stipend, e.g., as an advance or reimbursement.
2. Instructions on how to apply for the travel stipend.
3. The type of leisure activities or expenses covered/permitted by the travel stipend.
4. Guidelines on the reimbursement process and whether employees must provide receipts or photos to validate the travel expenses.
5. Travel advisory or precautions for solo travelers and employees vacationing in high-risk spots
6.Employees that can access the travel stipend fund.
What does a Travel Stipend cover?
What makes a travel stipend a genuinely unique employee perk is its flexibility. There are no defined rules on what employers can include or eliminate from a corporate travel stipend policy. Thus, HR teams can create a travel stipend plan (subject to the company’s budget and tax implications), offering employees limitless spending options.
A corporate travel stipend often covers the following travel expenses.
- Passport fees.
- Airline tickets.
- Bus/train/ferry fares.
- Per diem rates.
- Dining/meal costs.
- Hotel/lodging costs.
- Car/bike rentals.
- Fuel expenses for a personal or rental vehicle.
- Toll and parking fees (domestic travel)
- Prepaid phone costs and international data plan (international travel).
- Vacation/leisure activities.
- Incidental expenses. Employees that can access the travel stipend fund.
When should you offer a Travel Stipend Policy to employees?
While there are no federal or state laws requiring companies to offer travel stipends. Companies aspiring to be great places to work typically provide travel stipends for employees as early as possible to attract and retain the best talents in the industry.
Although early-stage startups often avoid creating a travel stipend policy due to budget constraints. The benefits of having a plan are too significant to ignore. You should start by offering annual or bi-annual travel credits of around $50-$100 per employee to cover minor travel expenses such as fuel, dining, and parking fees. Then gradually increase the amount as your budget grows.
Which employees should you offer a Travel Stipend to?
In theory, all employees can enjoy a company’s travel stipend perks. However, it is common for employers to offer travel stipends according to the following criteria
- Job performance.
- Employee experience.
Apart from limiting employee eligibility, the terms of a corporate travel stipend policy also determine the amount an employee receives according to the above criteria. Some employers also offer a cell phone reimbursement policy to employees when they are travelling for work. Ultimately, the final decisions should be in-line with the current corporate policy. Restricting employee eligibility to your travel stipend program may be necessary because of budget constraints. However, the overall impression among employees may be less than desirable to the company’s reputation and may obscure the program’s initial intentions.
Companies like FullContact got around the problem by offering travel stipends to employees with excellent performance records and capping the stipend amount paid per employee by tenure. Afar media, an online travel site, provides travel stipends only to employees with at least six months of tenure. At G Adventures, a tour group operator, an employee must be full-time and have worked for a year before being eligible for a personal travel stipend. Organization app maker Evernote takes a different route by making all its employees eligible for travel stipends irrespective of their tenure at the company.
What are the benefits of offering a Travel Stipend Policy at your company?
HR managers must understand that it is a win for both parties when employers offer a travel stipend package as an employee perk. In an era where individuals prioritize companies promoting employee wellness over those with no or insufficient wellness policies. We encourage HR teams to get their companies on board and reap the amazing rewards of offering an employee travel reimbursement policy.
Here are a few ways that employers can benefit from providing travel stipends.
Higher employee productivity.
An employee returning from a company-funded vacation displays more energy and positivity in the workplace. They tend to be more highly efficient, more engaging, and willing to contribute towards the team and corporate goals by producing first-rate work.
Higher talent retention.
Employees in companies offering travel stipends tend to stick around more than those with employers that don’t. Companies that attract and retain great talent develop highly motivated and high-achieving teams. An excellent example is FullContact, a Dever-based tech company providing travel stipends of up to $7,000 per employee with an 85 percent employee retention rate which is unusual in the tech industry.
Employees take fewer sick days.
Offering a travel stipend plan to your employees prokes excitement, optimism, and renewed enthusiasm to work. This results in fewer sick leave requests and reduced absenteeism.
Increased job satisfaction.
Employees benefit from improved work-life balance and overall wellness from enjoying the various holiday leisure activities paid for by travel stipends. The inevitable outcome is total job satisfaction and fulfillment, knowing that employees’ mental health issues are a priority.
Fewer healthcare benefits claims.
Providing employees with regular company-paid vacations lessens the risk of developing health issues and reduces healthcare costs.
Here are some other company perks and employee stipends that your employees will love:
- Work from Home Stipends
- Wellness Reimbursements
- Fitness reimbursements
- Corporate gym memberships
- Employee food allowance
- Tuition reimbursement
- Employee gym memberships
- Day care benefits for employees
- Employee lifestyle benefits
- Education stipend
- Lifestyle spending account
Some insurance companies offer their own wellness reimbursement program as well, such as the Cigna gym reimbursement program, humana wellness program, or the Go365 program by Humana.
What are the tax implications of travel stipends?
How can an HR manager set up a corporate travel stipend policy without worrying about unpleasant tax implications? An easy solution is collaborating with the finance guys across the hallway. Your company can choose to absorb the tax implications of offering a travel stipend or let employees bear the liability. The company’s travel stipend policy should disclose the relevant tax laws and indicate the party responsible for the tax implications.
Some companies create an internal accounting unit to keep tabs on their employee’s travel stipend expenses or hire a tax audit consultant for tax purposes.
Is a travel stipend considered income?
Travel stipends are not regular and non-taxable employee income excluded from the IRS guidelines on taxable fringe benefits. However, we recommend putting all your travel stipend paperwork under an accountable reimbursement plan to prevent the IRS from coming after employees for tax delinquency.
Do stipends get reported to the IRS?
If your company offers stipend payments under an accountable plan, you can exclude the income from your employee’s gross income report with the IRS. However, the IRS classifies stipends (advances, allowances, and reimbursements) not under an accountable plan as wages and are subject to its reporting rules.
Are stipends reported on w2?
If you provide travel stipends as per diem to employees under a non-accountable plan, the payment should be under or equal to the federal per diem rates. You must ensure the employee submits an expense report, and the excess amount must be reported as taxable wages in the W-2 Form.
5 Examples of Travel Stipends offered by Employers
Since the Covid19 pandemic, employers have shifted focus to providing non-conventional fringe employee benefits emphasizing wellness and work flexibility over traditional financial benefits. However, a study reveals that employees typically use around half (54%) of their annual eligible vacation time, while only 23 percent max out their allotted vacation days.
Here are examples of travel stipend plans developed by companies determined to fully entice employees to use their eligible vacation days.
Employees who have spent at least six months at BambooHr receive fifteen to twenty annual vacation days, depending on tenure. The software provider encourages workers to take precious time off with up to $2,000 to cover travel expenses which can include
- Airline tickets.
- Hotel rooms.
- Tours, events, and other vacation-related leisure activities.
Software maker FullContact probably has one of the most generous travel stipend policies around. Each year, employees receive between $2,000 to $7,500 in travel stipend to spend on any vacation expense imaginable. There is a catch, though. FullContact insists that employees on vacation must go off-grid and “disconnect” completely from work.
Evernote, a Redwood Ca. based task management and organization app, has a remarkable travel stipend that pays its staff $1,000 yearly for taking long weekends. Employees who take a break from work for five successive days or more for personal travel (or to lie down on the living room couch) qualify for the travel stipend. Evernote has no guidelines restricting how its employees can spend the cash.
G Adventures provides up to $2,859 in vacation expenses and a flight subsidy of $570 for full-time employees who have spent at least a year with the company. The small-group travel tour company operating out of Toronto, Canada, offers subsidized vacations for staff every ten months.
Global travel accommodations site Airbnb provides its employees with a $500 quarterly travel stipend ($2,000 per year) to book a place on the company’s accommodation platform while traveling on any of their annual fifteen paid days off.
How to Offer an Employee Travel Stipend Policy at your Company
To develop a travel stipend policy that works, you must involve the company’s essential stakeholders. HR Managers must ensure that subsequent policy updates retain the original goals for setting up the travel stipend policy while prioritizing the core values defining the company’s current corporate culture.
Customizing a template can be a great idea, but HR teams and other stakeholders need to consider critical aspects they might change to suit their business model. We have outlined a few steps to follow when creating a travel stipend policy at your company.
- Define the primary purpose for creating a travel stipend policy at your company.
- Involve people from other departments that need to approve or make critical inputs to the travel stipend policy. A typical list of roles involved in the process includes
- HR manager.
- Travel manager.
- Finance manager.
- Frequent travelers.
- Develop a list of expenses covered by the travel policy and information on the following.
- Employee eligibility.
- Accessing the travel stipend.
- Reimbursement process.
- Travel support contact.
- Travel Advisory.
- Emergency procedures.
- Create a final draft and get approval from all relevant stakeholders.
- Get the word out to employees through all communication channels available.
Thinking of setting up an effective travel stipend policy for your company? Then you need to work with experts capable of guiding you through the numerous legal and financial pitfalls that could put the entire process at risk and endanger your company’s bottom line. If you would like to learn more about fringe benefits, check out this guide on the different types of fringe benefits you can offer.
We are interested in working with you! IncentFit is an industry-leading health and benefits platform for businesses looking for amazing employee wellness products.
Schedule a chat with an IncentFit benefits expert to discover your best strategy. We will answer your questions, learn more about your company’s plan, and provide effective solutions.