Commuting to work isn’t something everyone enjoys, but for some employees, travelling for work is an inescapable part of their job. And while there’s no specific legal entitlement to allowances, employees and employers can come to an agreement that recognises travelling for work as a component of their role. We’re not just talking about people for whom travelling is the nature of the job, but also professions that require attendance at face-to-face meetings or in-person visits to stores, sites, or houses.

If you have employees who are required to travel away from their primary place of work to complete their job, it’s considered good practice to reimburse or suitably compensate them should they incur costs carrying out such work.

Here we explain what travelling for work entails, the differences between expenses, reimbursements, and allowances, and why employers can’t afford to get it wrong.

1. Expenses

If you’ve any employees who are travelling for work as a required part of their duties, it’s important that you clearly outline how the travel expenses will be paid. Some examples include:

  • the business provides the employee with the property they can use for work-related travel purposes such as a company car, a fuel card, or vouchers;
  • the business bears the travel expenses by booking and paying for transport, accommodation, and meals in advance;
  • the employee bears the travel expenses and is later reimbursed that amount by the business; or
  • the employee is provided with a travel allowance or lump sum payment to cover the anticipated costs of travel.

Whichever method you choose for your business, it needs to be communicated to your employees. If an employee is allocated company property like a motor vehicle or fuel card, you should consider implementing relevant policies to govern how company property operates. For example, you should think about whether the employee is permitted to utilise it for reasonable personal use or whether it should be strictly confined to authorised business use.

2. Reimbursements

If you’re required to reimburse the employee, ensure that you advise your employees to obtain and keep receipts for all expenses which should be produced to the business before the reimbursement will be made.

We also recommend that you implement a policy outlining what’ll be considered reasonable and unreasonable expenses or requiring that expenses be approved in advance by the business if you prefer.

3. Allowances

You may choose to implement a form of vehicle or travelling allowance intended to compensate employees for the inconvenience of out-of-pocket expenses of travel. This is commonly expressed as a per-kilometre mileage rate so you should require such employees to keep a detailed logbook of their work-related travel including recording the odometer at the start and end of each journey to ensure you’re paying them the correct allowance.  Mileage rates must follow the Inland Revenue guidelines.

For salaried employees, you may wish to incorporate a vehicle allowance into the annualised salary amount. This’ll require an estimate of the kilometres the employee is expected to travel during the year, which may not always be easy to calculate. If in doubt, round up and round up again – the last thing you want is an underpayment claim when we’re only talking about a matter of cents per kilometre travelled.

4. Travelling time

Employees should usually be paid for time spent travelling for work-related purposes, as it’s part of their duties as much as answering phones, writing reports, or providing customer service. However, it’s important to note that whether an employee is entitled to be paid for travelling time will depend on the situation, and the employment agreement or workplace policies that are in place.

Time spent getting to and from work doesn’t normally need to be compensated; the costs of this travel are borne by the employees themselves. There are exceptions to this however such as if the employee is being temporarily, or even permanently, relocated from their primary place of work. Look into what the additional travel time will mean for the employee and what kinds of additional expenses may be incurred as a result of this, and what kind of compensation will be considered reasonable under the circumstances.

Keeping track of travel expenses, reimbursements, and allowances can be tricky, but you can’t afford to get it wrong. For more information about how to manage travel for work, please reach out to our experts via our 24/7 Telephone Advisory Service.