Commuter benefit is a tax-free employee benefit that an employee can use to pay for public transport trips between home and workplace. It has become an increasingly important part of employee benefits during the hybrid work era. If an employee’s benefits budget covers only sports and culture, the cost of commuting may be left entirely at their own expense. In this blog, we look at why commuter benefit should be evaluated as part of total rewards and why increasing the benefits budget can be a more cost-effective solution for the employer than a pay raise.
This is a common problem: when a company introduces a hybrid work policy, the new rules are followed for a few months at most. Sooner or later people return to their old habits, so those who enjoy remote work stay at home and the office regulars keep working on-site. The situation can be frustrating and cause resentment among employees. Why doesn’t everyone commit to shared ground rules?
Solutions to weak commitment are often sought in culture, leadership or workspaces. However, one perspective can easily go unnoticed: the cost of the commute and the time spent on it.
Specialists used to remote work are not easy to drag back to the office, because commuting costs money and takes time.
Explore The Great Employer Benefits Study and base your decision on data, not gut feeling.
For decades, the core of employee benefits has stayed the same: sports and cultural hobbies are supported through benefits.
Employees are used to an annual employee benefit of 400 €, which the employer offers as a sports and culture benefit. If the benefits budget per employee falls below this, the recipient does not feel it is enough for anything else.
The growth of hybrid work has created a need for a new kind of support.
When employees go to the office 2–3 days a week, commuting becomes a concrete cost that shows in the employee’s wallet.
The commuter benefit is intended to cover the costs of trips between home and workplace. For example, the benefit can be used to pay for
According to the tax authority’s guidelines, a personal monthly ticket can also be used for leisure trips. On top of that, according to a study by HSL, the commuter benefit also increases everyday physical activity, as those who commute by public transport take on average 2000 more steps per day than those who travel by private car.
In a growing number of organisations, the commuter benefit has become a central part of employee benefits.
Read more: Mihin työmatkaetua voi käyttää?
Often the employer’s good intentions do not translate into the employee’s everyday life, because in many organisations the employee-specific benefit remains so small that nothing is left for commuting. If a company has an annual benefits budget of less than 400 €, the employee spends it on sports and culture.
This leaves nothing for commuting costs. In other words:
In light of this reality, the level of the benefits budget should be reviewed.
As the prices of consumer services have risen, the sports and culture benefit hardly covers even these, even when it is offered in full, that is, 400 € per year. All other everyday services are then left for the employee to pay for.
But if the annual benefits budget is increased by, for example, 200 €, the whole picture changes quickly:
Besides, the commuter benefit is tax-free for the employee up to 3 400 € per year.
Read more: Current tax limits for employee benefits.
With a pay raise, the employer pays the payroll costs and the employee pays income tax. But if the employee’s benefits are increased instead of salary, payroll costs do not have to be paid.
The employee does not pay income tax on their share either, because the benefits are tax-free for both the employee and the employer.
In addition, the costs of the benefits are deductible in the company’s taxation.
With a pay raise, the employer pays the payroll costs and the employee pays income tax. But if the employee’s benefits are increased instead of salary, payroll costs do not have to be paid. The employee does not pay income tax on their share either, because the benefits are tax-free for both the employee and the employer.
In addition, the costs of the benefits are deductible in the company’s taxation. The same money as benefits produces more value for the employee than as salary.
The same money as benefits produces more value for the employee than as salary.
The commuter benefit is a fringe benefit, so it does not have to be offered to all employees in the same way. This means you can optimise your company’s personnel budget so that employees who commit to office days receive the commuter benefit on top of their salary.
Read more: Commuter benefit: advantages, taxation and costs.
From the employer’s perspective, Epassi’s Commuter Benefit is easy to implement and light to administer.
Read more: 6+1 easy and tax-free employee benefits for a small business.
Our invoicing is always based on the actual use of the benefits, and we credit unused balances against the next order.
The commuter benefit can also be seen as a question of equality, because in many organisations the employer pays for a parking space for employees who drive a private car during the working day. Those who travel by public transport are often not offered a similar benefit. The parking space usually comes on top of salary, but it is not usually thought of as a benefit in the same way as more traditional employee benefits.
It is a benefit nonetheless.
If you are ready to support private car use, would you be ready to support those who use public transport as well?
Epassi’s Commuter Benefit offers different options for this.
If the value of the benefit is at most 900 €/year (70 €/month), there is no need to report the employee’s actual travel costs to the Incomes Register.
A practically cost-neutral solution for the employer.
The employee’s income tax rate decreases.
The employee has more money left in hand from their salary.
Hybrid work is not a temporary phenomenon, but a way of working that is here to stay.
When working life changes, companies have to change with it.
That is why you should ask yourself:
Do you want your employees in the office enough to be ready to make an effort yourself?
Explore the possibilities of the Commuter Benefit and order the benefit for your company.
Are you already an Epassi customer? Easily add the Commuter Benefit to your benefits order.
The commuter benefit is a fringe benefit intended to support employees with the costs of trips between home and workplace.
Yes. According to the tax authority’s guidelines, a personal public transport season ticket paid for with the commuter benefit can also be used for leisure trips.
The commuter benefit is tax-free for the employee up to 3 400 euros per year. The employer can deduct the costs of the commuter benefit in the company’s taxation.
The commuter benefit can be offered either on top of salary or as part of salary (gross salary deduction). Epassi’s Commuter Benefit is easy to offer through the Epassi app. The employer activates the Commuter Benefit as part of Epassi’s Flex benefit or offers it as a separate benefit. With Epassi’s Commuter Benefit, the employee can buy public transport tickets directly in the Epassi app and in the online stores of public transport providers.
Yes. The commuter benefit is tax-free for both the employer and the employee. The employer can deduct the value and costs of the benefit in the company’s taxation. The employee, in turn, does not pay income tax on the benefits.
The commuter benefit is a worthwhile way to support employees with everyday costs. The usage rate of the commuter benefit is easy to monitor in Epassi’s admin panel. The commuter benefit is a fringe benefit, so it does not have to be offered to everyone in the same way. The commuter benefit is an investment that pays for itself quickly in the form of more satisfied employees, improved work performance and a more positive work atmosphere. Both employees and employers see the commuter benefit as an important part of corporate responsibility.
The commuter benefit is easy to budget as part of the personnel rewards budget. If the commuter benefit is offered at a maximum of 900 euros per year, there is no need to report the employee’s actual travel costs to the Incomes Register.
The commuter benefit and a pay raise do not exclude each other. The commuter benefit should be offered on top of salary to those employees who travel between home and workplace by public transport. With the commuter benefit, you raise the added value of the employee’s pay, because the money saved on the travel ticket can be spent on other things that matter more to them. The benefits are tax-free and no payroll costs are paid on them.
In practice, the benefits budget can be too small if the employee has to spend such a large share of it on sports and culture. In that case there is no room left for commuting costs.
Explore Epassi’s range of employee benefits and take the first step towards a workplace with stronger retention power.