Telecommuting expenses during the Covid-19 pandemic crisis: Should employers bear the cost?

Telecommuting expenses during the Covid-19 pandemic crisis: Should employers bear the cost?

Telecommuting expenses during the Covid-19 pandemic crisis: Should employers bear the cost?

As part of the state of health emergency declared in the context of the Covid-19 pandemic, the French Government has strongly recommended the implementation of telecommuting for activities and positions compatible with this organization of work.

It has more recently also provided an opinion about the telecommuting-related allowance.

In addition, the French social security office (Urssaf) recently communicated a new tolerance applying to telecommuting allowance paid to employees.

As a reminder, telecommuting or telework is a form of organization and / or performance of work. It uses information and communication technology, within the framework of a contract or an employment relationship, in which work which could have been carried out on the employer’s premises, is carried out outside these premises on a regular basis.

In this period of pandemic, if the activity and employees’ positions allow it, telecommuting is the preferred solution for business continuity. This method of work organization usually requires the agreement of the employee and employer. However, Article L.1222-11 of the French Labor Code mentions epidemic risk as justifying the use of telework without the employee’s agreement. The Covid-19 pandemic is covered by this exception.

Under normal circumstance, the employer is obliged to bear the professional expenses incurred by an employee in a telework situation (e.g. additional consumption of electricity, heating etc.). This is done by means of a telecommuting expense allowance

In the context of the current pandemic, the French Government’s most recent published opinion is that employers do not have to pay a telecommuting related allowance during this period (except if specified otherwise by a collective bargaining agreement signed at the Company level or in a formal Company policy). However, it is to be noted that this opinion is in contradiction with both the general principle of reimbursement by employers of business expenses incurred by employees in the performance of their work and existing regulations which provide for reimbursement of regular telecommuting related expenses.

The Government’s published opinion does not have the force of Law, so  in the event of litigation, the courts could decide that the standard regulations apply as presented above or on the contrary could consider that the employer is exonerated in the exceptional context of the pandemic. Consequently, unless new formal regulations come to apply only future case law will provide certainty on this question. While awaiting such case law, employers who have implemented telecommuting in the specific context of the pandemic are faced with the choice of their preferred course of action.

Tolerance for flat-sum payments

To the effect of supporting telecommuting related expenses, the employer has the choice between paying a lump sum allowance or reimbursing actual costs. The amounts reimbursed based on actual costs are exempt from social contributions. However, this does require the collection of all evidence of expenses from the employees to justify the amounts reimbursed in case of an audit from the French social security office (Urssaf). This can be a cumbersome process. For this reason, employers may prefer to pay a lump sum allowance. However, such an allowance is subject to social charges and employee’s income tax.

Urssaf recently published a position of  tolerance such that the lump sum allowance paid by the employer will be deemed to be used in accordance with its purpose and exempt from social contributions up to an overall limit of €10 per month for an employee telecommuting one day per week. This tolerance increases up to €20 per month for an employee telecommuting two days per week, etc. and therefore up to €50 per month for five days of telecommuting per week. When the amount paid by the employer exceeds these limits, the exemption from social charges and employee’s income tax may be allowed if proof of the reality of the professional expenses borne by the employee can be provided.

Though this position of tolerance does not have the force of law, it is URSSAF that performs the audits of companies with respect to compliance to the obligations of paying social contributions. One can therefore reasonably imagine that they would apply this position in the event of such an audit.

Helen Abruzzino

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