Remote Employees

While not long ago remote employees were quite rare in the company's staff, today teleworking is a stable trend, and more employers are faced with issues concerning workplace engineering, jobsite organization, and their responsibilities before remote employees. Indeed, in order to perform their labour functions, specialists need equipment (at least a computer or its analogue), and in certain cases - also special "stuffing": for example, special video cards, memory cards, professional programs, and information security software.

Olga Abashnikova, Expert Methodologist in BDO Unicon Outsourcing, told us who is responsible for providing equipment, and what expenses of remote employees are subject to reimbursement.

REGULATORY ENVIRONMENT: WHAT HAS CHANGED?

Before the beginning of 2021, compensation and reimbursement for employees who used personal equipment in the interests of employer were carried out on the basis of Art. 188 of the Labour Code. All categories of employees and any equipment used for work-related purposes (computers, cars, photo and video equipment) fell within the scope of this article.

On January 1, 2021, amendments to Chapter 49.1 of the Labour Code of the Russian Federation entered into force, which supplemented the existing rules and determined new procedures for interaction between employers and employees, including the employer's obligations to compensate and reimburse.

First of all, it is worth understanding how “compensation” differs from “expense reimbursement”, and when they become operative.

COMPENSATIONS: DETERMINE THE AMOUNT OF PAYMENTS

The concept of "compensation" is defined in Art. 164 of the Labour Code of the Russian Federation as cash payments set in order to reimburse employees for costs associated with their performance of labour or other duties provided for by the Labour Code of the Russian Federation and other federal laws.

If an employer does not provide a remote employee with office equipment, the employee must be paid compensation for the use of personal equipment, even in the absence of direct cash costs, due to increase in the equipment wear-out percent and decrease in its useful life.

The amount of compensation is not legally regulated, it should be determined by mutual agreement of parties and depend on the specific labour function of an employee. For example, the amount of compensation for an architect's computer using expensive software and high-performance equipment should be rated higher than for a computer with a standard "office" software package and Internet access. The use of personal equipment for business purposes must be provided for in the employment contract or in an additional agreement to it, otherwise some regulatory authorities may recognize compensation payment as unjustified. According to the letter of the Ministry of Finance dated November 6, 2020 No. 03-04-06/96913, the amount of compensation must be economically feasible, while the organization must "have copies of documents, both confirming the purchase (rent) of equipment (utilities) by the employee, and confirming the expenses incurred by them while using it for work-related purposes."

An organization has the right to establish methods for determining the amount of compensation at its own discretion; they shall also be fixed in a local regulatory act. Since the amendments were adopted only six months ago, and there is still no experience of inspections, it is difficult to say which of the methods will be challenged by the Russian Ministry of Finance. Organizations act at their own risk and try to protect themselves from tax consequences as hard they can.

EXAMPLE OF COMPENSATION CALCULATION

Company can set limits both in terms of the date of equipment acquisition (for example, based on the actual equipment depreciation period), and when calculating the refundable amount: for this, maximum cost of the equipment must be divided by a certain useful life.

For example, if useful life is 60 months, and the maximum indemnity cost in your company for one employee is 50 thousand roubles, the limit will be 833 roubles per month. For economic reasons, several factors can be applied to these amounts:

• work load factor (shows how long a computer can be used for business purposes);

• part-time ratio;

• telework ratio;

• ratio of hours actually worked.

The latter ratios are calculated individually and depend on the terms of employment contract, schedule and timesheet data.

Scenario: an employee files documents proving that 3 years ago they purchased a laptop in their own name worth 70 thousand roubles. According to the employment contract, normal useful working hours were established for this employee – remote work 5 days a week, and there were no absences in the reporting period.

To calculate compensation payments:

1. We divide the cost of equipment according to the sale receipt (70 thousand roubles) by the established period of use (60 months), and compare it with the set limit (833 roubles).

2. We apply the work load factor set in the company as 33.70%, and we get the total compensation - 449 roubles.

In some situations, a remote employee can incur direct costs, for example, if hardware is to be replaced in order to perform their duties. In this case, the employee must submit documents confirming purchase and installation (receipts, invoices, etc.), and the employer shall indemnify for the expenses incurred.

REIMBURSEMENT: FUNDAMENTAL RULES

To determine what expenses should be reimbursed, an employer should be guided by the following rules.

If an employer provides an employee with corporate equipment, they are not obliged to reimburse the employee for any costs associated with its use.

There are situations when office equipment fails. In this case, an employee is obliged to return the equipment, and an employer will make its own decision on what to do with their property: replace the equipment or send it for repair. The parties may also change the terms of the employment contract so that the employee uses personal equipment in the employer's interest.

The employer is not obliged to reimburse the costs associated with the use of the equipment belonging to the employer, but they can do this by securing such a possibility in internal regulations or employment contract, prescribing the procedure and amount of expenses to be reimbursed to an employee.

If the corporate equipment issued by the employer, for example, a computer mouse, is out of order, an employee can return it for replacement or purchase an analog on their own, if such a procedure is provided for in internal regulations. In this case, the employee must return broken equipment and submit documents (receipt) for the purchase of a new mouse, and the employer must reimburse acquisition cost in the amount established by the regulations.

The obligation to reimburse costs (Article 312.6 of the Labour Code of the Russian Federation) applies only to costs associated with the use of equipment, software and hardware, information security tools, and used by an employee in the interests of an employer.

This is not about related costs that an employee may incur in connection with performing their job remotely. Therefore, a specific list of equipment and software and hardware must be fixed in local regulations or in employment contract, with justification of the need for their use to perform a specific job function.

Reimbursement of expenses related to the use of employee’s personal equipment should be based on documents confirming such expenses (receipts, invoices, etc.).

Employer has the right to set limits within which an employee will be reimbursed for the cost of purchasing and repairing equipment or buying programs. For example, an employee should understand that if they buy an optical mouse worth 3 thousand roubles, they can count on reimbursement in the amount of only 500 roubles, since expensive devices are not required to complete their tasks.

INTERNET COSTS: SHOULD THEY BE REFUNDED?

Since a remote employee is not "confined" to a particular work spot, an employer has no way of verifying that the employee uses residential Internet access for business purposes. Accordingly, it is impossible to obtain reliable information on what Internet tariff an employee uses, how much is required to perform official tasks, and what expenses the specialist incurs in connection with Internet costs.

There is no consensus in professional circles as to whether Internet costs should be reimbursed. According to one point of view, Internet access is associated with the use of personal equipment for business purposes, which should be compensated. Supporters of a different approach argue that according to Art. 312.1. of the Labour Code of the Russian Federation, remote work requires Internet connection, that is, the Internet is a way of performing a job function, and not an instrument of labour, therefore, an employer is not obliged to reimburse such expenses to an employee working under a remote work contract.

If a company considers it necessary to compensate for these costs, it is worthwhile to provide for monthly compensation, the amount of which will be determined by mutual agreement of the parties, since it is impossible to provide any documentary evidence in this case. The amount of monthly compensation or the limits of expenses reimbursed to the employee should be determined with the active participation of an accountant able to professionally assess tax risks.

Compensation for the use of an employee's personal equipment is not an easy procedure, it requires additional resources from HR specialists and accounting staff. However, competently drafted internal regulations and monitoring compliance with reporting deadlines will help avoid problems when inspected by controlling authorities. 

Source: GARANT.RU