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Remote work: equivalent and fixed payment

The new regulations on remote work entered into force on 4 April 2023 and replaced the provisions on teleworking. Recent history has shown that an important problem for employers is the method of settling costs between the employer and the employee, which the latter incurs in connection with remote work.

Cost of remote work

The legislator's assumption was to charge employers with costs related to remote work, eg electricity, Internet and printing. To this end, the new regulations allow the settlement to occur by means of an equivalent or fixed payment, as agreed between the employee representatives and the employer. The equivalent should depend on the type and amount of costs incurred (eg consumption of electricity, Internet, telephone, office supplies, depreciation of equipment) or as reimbursement of costs documented by the employee. For this reason, the equivalent settlement should reflect the specific costs incurred by the employee. While settlements in this way can be useful if there are several employees working remotely, when dealing with a larger number of remote employees, settling the equivalent for each of them could be very time-consuming for employers. On the other hand, the equivalent will not always be an optimal solution for employees as they would have to meticulously collect all the documents needed for settlement by means of an equivalent and submit them to document costs, which in most cases will not exceed a few zlotys per day. For this reason, in our opinion, the fixed payment settlement will prevail.

Fix payment settlement

The method of determining the fixed payment is described very generally by the legislator. When determining the amount of the settlement, the employer should take into account the standards of consumption for materials and work tools, including technical devices, their documented market prices and the amount of materials used for the employer's needs and their market prices, as well as electricity consumption standards and costs of telecommunication services. However, there is no exact method of calculation, which in practice can lead to significant discrepancies and potentially also disputes between employers and employees. Currently, the prevailing approach is for the employer to estimate the costs of remote work using specific tools provided by the employer, eg taking into account the cost of electricity consumption of a specific device for eight hours of work during the day.

Tax problems with settlements for remote work

Money received by an employee as reimbursement of costs related to remote work is not income within the meaning of personal income tax regulations. This is clear in the case of an equivalent where it is based on the relevant documents. However, a problem arises in the case of excessive (not based on actual costs) fixed payment. In this situation, the tax authorities may question the amount of the fixed payment, claiming, for example, that the fixed payment is largely remuneration for work that is already taxed. Therefore, it is in the interest of both the employee and the employer to calculate a fixed payment amount that best reflects the real costs of remote work.

Moreover, taking into account the very general provisions on the calculation of the fixed payment, employers will have to remember to keep documentation related to the calculations in order to be able to present it to the relevant authorities during an inspection and justify the amount of the fixed payment applied in the workplace.