Travel reimbursement during the corona crisis. Continue to pay or stop?

Due to the corona crisis, many people work from home. Therefore, travel expenses are currently out of the question for many employees. In addition, many companies are in dire need of all financial resources. Ending travel reimbursement can be a simple solution to relieve the financial pressure. What about reimbursement of (fixed) travel expenses during this period of working from home?

Mode of reimbursement

There is no legal right to a travel allowance, but a collective bargaining agreement or employment contract often includes arrangements for reimbursement of travel expenses.

Travel expenses can be reimbursed by the employer in various ways. For example, travel reimbursement can be a fixed monthly amount, a subscription to public transportation, or reimbursement of travel expenses declared at the end of the month. With the latter two variants, non-payment of travel reimbursement will usually not cause any ambiguity. A season ticket may possibly be discontinued or the expenses already incurred. In the case of retrospective reimbursement of travel expenses, the employee will not claim if no travel is made and the employer does not have to reimburse anything in that case. The question is what about a fixed travel expense reimbursement.

Ending fixed travel costs

With a fixed travel allowance, the employer remits a fixed amount determined based on the employee's monthly travel expenses each month with the payment of salary. The allowance is not a form of salary. In principle, the employer may unilaterally discontinue an employee's travel allowance at the time those expenses are no longer incurred. This is because the sole purpose of a travel allowance is to reimburse expenses actually incurred by an employee. Exceptions are conceivable; for example, a collective bargaining agreement or employment contract may stipulate that an employee who works from home or is sick must still be paid travel expenses for a certain period of time. In that case, the collective bargaining agreement or employment contract is leading.

Continued payment of fixed travel expenses

The employer may also choose to continue to pay for travel expenses if travel is not undertaken.

The law basically states that the employer may continue to pay travel expenses for up to six consecutive weeks of the employee's absence. After that, the tax authorities will consider the allowance as disguised wages. The employer is then only allowed to pay the travel allowance again from the month following the month in which the employee returns to work.

On April 14, the Cabinet announced that this legal rule will not apply during the corona crisis. If the employer wishes to reimburse the travel expenses, it is allowed and the tax authorities will not consider the reimbursement as disguised wages.

Resume

An employer can unilaterally stop travel reimbursement if no actual expenses are incurred. An employee who works from home because of the corona crisis does not incur any actual travel expenses and is therefore, in principle, not entitled to reimbursement. Keep in mind that different arrangements may have been made in a collective bargaining agreement or employment contract. The employer also has the option of continuing to pay the travel allowance if it deems it appropriate. Typically, an unduly paid reimbursement is considered disguised wages by the tax authorities. During the corona crisis, the Inland Revenue will not.

Want to know more about paying employee travel expenses or have other questions? Feel free to call or email us.