The Ultimate Guide to Remote Work Stipends

The best and most impactful way to support your remote and hybrid employees, wherever they live.

In a "Navigating COVID: Returning to work" report from SHRM, they found that 68% of organizations say they probably or definitely will adopt broader or more flexible work from home policies for all workers. (SHRM, 2020).

Fast forward to today, where people across the globe have become accustomed to working remote due to COVID-19 (and don't want to go back!), companies are being forced to adapt to the needs of their most important asset: their people.

The ideal method for supporting your remote employees, which is also the most flexible and scalable option for HR, is a remote perk stipend - also known as a remote work allowance or remote employee reimbursement.

With stipends, you're able to offer more perks with less money, and to ensure it's available to everyone regardless of where they work, and who wouldn't want that? That's why we developed this guide to everything you need to know about remote work stipends.

Here's what is covered in this guide:

  1. What is a remote stipend
  2. Examples of remote work stipends
  3. Benefits of remote work stipends
  4. What people spend their remote work stipend on
  5. How to create one for your organization

What is a remote work stipend?

First, a definition:

A remote work stipend, or remote work allowance, is a sum of money given to employees for them to use to access perks while working remotely.

A remote work stipend can be used in one or both ways:

  1. to purchase home office equipment, a coworking pass, coffee, and anything else that makes their remote work locations comfortable, productive, or successful. It can be a one-time equipment stipend, or an on-going one.
  2. to purchase general perks that an on-site team has access to, but a remote employee does not, such as food, health and wellnesslearning and developments perks.

Further details on what they are:

  • Stipends can be given out on a monthly, quarterly, semi-annual, or annual basis. 
  • It is comprised of taxable and non-taxable items. Taxes can be grossed up by the employer or employees can cover the taxes.

Four Examples of Remote Work Stipends

As mentioned above, when setting up a remote work stipend, there are two approaches:

  1. You can set up a stipend to help them build their remote work environment, or
  2. You can set up a general perk stipend that gives your team access to personalized perks. If you're a hybrid company, you can craft this type of stipend so that you support your remote people and on-site people equally.

Below are three examples highlighting the unique approaches:

1. HubSpot, a hybrid-remote company

They provide one stipend for their remote people:

$60/month tax-free monthly stipend to their remote people

2. Webflow, a company with 70% of its team remote around the globe

They provide three stipends for their team:

  • $250/month for remote workers
  • $200/month (for everyone) health & wellness stipend
  • $1,000/year (for everyone) continuous learning stipend

Learn more about how Compt helped Webflow make perk allowances possible at their company.

3. Basecamp, a fully remote company

They offer the following perk allowances for their team members:

  • $100/month coworking space stipend
  • $100/month fitness allowance
  • $100/month massage allowance
  • $1,000/year continuing education allowance

To learn more about these in-depth and the thinking behind them, check out their post on employee benefits at Basecamp.

4. Buffer, a fully-remote company

  • $200/month for "Working Smarter" stipend for coffee shop working purchases
  • $500/teammate for home office set-up
  • $200/year for tech/office needs
  • Internet reimbursement stipend
  • $850/year continuous learning stipend

To learn more about these perks and their budget vs spent in 2019, check out this in-depth post about Buffer's perk stipend audit.

There are many more examples of companies doing this successfully. If you want to hear what our customers are doing, click here to talk with a Compt lifestyle benefits specialist.

Calculate how much your perk vendors are costing you

Input some basic data into our Perks Vendor Cost Calculator to identify how much you're spending on all of your vendors, and how much you can save by consolidating with Compt.

Benefits of remote work stipends

Many companies are turning to stipends, or some reimbursement policy, to solve for their employees in more meaningful ways. Not only does the perk stipend model offer significant upside to how your company manages perks and benefits from the day-to-day management and tax perspective, but it also helps promote other strategic areas of the business such as your culture and values, attracting and retaining talent, inclusivity and employee engagement. Perk stipends also represent the most popular new lifestyle benefit that companies have introduced after the pandemic.

Tactical benefits:

One of the most impactful and relevant benefits of offering a remote stipend as a perk especially today is that it's adaptable for ANY working environment - whether that's back to the office, 100% remote, or something in between in your own version of a hybrid work model.

Here are even more specific benefits of a remote stipend or reimbursement program:

IRS compliance:

  • If you use software like Compt, IRS compliance is automatically taken care of for you, making your HR and finance teams lives' easier. (Note: While it's very common for companies under 100 employees to overlook the need to ensure tax compliance in their perk offerings, growing companies know how critical it is to have all employee compensation-related programs (like stipends) be done "by the book".)

Better perks:

  • Your team gets access to a broader base of benefits without needing to increase the overall budget. Because the pool of money is distributed to people, they pick what’s best for them instead of picking a few perks that everyone gets.  
  • Help employees get what they need when they need it, regardless of where they live. 

Increased efficiency:

  • Decrease the administrative burden on HR by avoiding vendor management in various locations, and/or eliminates the need to manage various software. 
  • Most organizations can agree, perks offered the traditional way wastes money on two fronts: 1. spending money on perks that go unused and 2. spending valuable people time on picking, piloting, purchasing, managing, and communicate perks. With stipends, all of that is cut out and everyone gets what they need when they need it -- no wasted money or time. 

Strategic benefits:

  • Align with culture/values: Can be adapted to offer all perks or support company values like a continuous learning stipend or a health and wellness stipend.
  • Scalable: Using a perk stipend allows you to easily scale up (or down) a perks program.
  • Mindful spending: Because employees get the money to pick what’s best for them, they spend more mindfully. Instead of requesting perks willy nilly, people are more thoughtful about what they spend their money on.
  • Deeper connections: Perk allowances enhances the connection between employers and their team because they infuse trust. When people get to exercise autonomy and are treated that they’re the experts of their own world, the relationship deepens and becomes richer.

Additional benefits:

  • Your company has access to a greater pool of top talent, and a better ability to retain talent who wants more flexible work from home options.
  • What people purchase can relate to their home working space, work-life balance, mental health, or anything else that suits them and their always-evolving needs.
  • You provide them with the best, most relevant reward they could receive. As a NYTimes piece put it, so many people aim for the "big reveal" but when giving gifts, people want something they can actually use.

If you're still wondering why your remote team should have perks, here's a piece detailing why your remote employees need support like your on-site team members

[Considering between perk software vendors? Check out our guide, Comparing Perks Software: Everything You Need to Know]

Learn even more about the benefits of Lifestyle Stipends

Download the free ebook to find out why lifestyle stipends have become the most common new benefit.

What do people spend their remote work stipend on?

Here at Compt, most of our customers who set up remote work stipends select one or more items from the following broad-based categories for their employees to spend in.

The broad-based categories is a deliberate approach to remote perks. With a broad-based approach, you're able to avoid building out a long list of vendors and initiatives you'll cover. If you do want to pick specific vendors, then you may want to go with a vendor-based approach.

Here’s How to Set Up a Remote Work Stipend:

1. First, determine how much you want to offer your team members within what timeframe.

Some examples include offering $100/month, $500/quarterly, or $2,000 annually.

If you are interested in getting insight into what the most successful companies do, we can share some insider information. You can also decide you want to offer a stipend only to remote team members or one to them in addition to what you offer all employees.

2. Secondly, select your perk spending categories.

In the examples above, you'll notice that they most often surround a category of spendings like health and wellness, continuous learning, family, or travel.

Doing it this way allows you to create a custom program for your team and then allows 100% personalization for them. 

If you're looking for ideas for spending categories beyond a remote stipend, consider tying them to your company's culture, goals, or important cultural initiatives.

3. Once you have this information determined, now it’s time to decide how you’ll manage the process.

Your options include:

Managing the perk allowance manually

If you choose this option, be prepared to set up a process to track purchases, receipts, balances, approval and paid perks, as well as rejections or ones which need further review. Consider using Google forms to track submissions, excel or Google sheets to track progress, and be sure to create a process to track the nontaxable vs. taxable (for IRS compliance).

Choose software to help you manage this

Options like Compt can help communicate your programs to your team members, track balances and spending, scale the process for you, eliminate a large portion of work, and provide valuable metrics. Plus, Compt is 100% IRS compliant, making you and your finance team's job much easier.

If you're looking for more, we wrote an in-depth guide to set up a lifestyle stipend here.

Ready to see how a remote work stipend would work at your company?

We're here to talk through your company's current goals and challenges with supporting remote team members. Let's connect to see if employee stipends can help you offer what your people really need.

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