Understanding the Ins and Outs of Travel Stipends: How do Travel Stipends Work?

Today’s society is a global one. Gone are the days when people were happy to live, work and spend leisure time in one place. Nowadays, many people feel negatively about having to be confined to one country, never mind one city—the recent pandemic made that very clear!

In light of this, more and more companies are recognising their employees’ wanderlust and offering perks and benefits to facilitate it. A new word has even been created out of it: ‘bleisure’, referring to tagging leisure time onto the beginning and/or end of business trips.

A key tool for motivating and engaging your employees like this is the travel stipend. Not sure how these work or what the different options are? Keep reading for a summary of the most important things you need to know.

How do travel stipends work? The best and most comprehensive guide to understanding them.

Simply put, a travel stipend is a sum of money allocated to each employee for personal travel-related expenses. They can be given to employees in a variety of different ways, either with or without a requirement to provide details of how they have been spent—although without some kind of accountability, they don’t much differ from normal salary.

In terms of tax liability, they are an employee benefit and, therefore, will generally count as taxable income. As the employer, you can choose whether you absorb this tax liability within the benefit or pass it on to your employees.

Benefits of travel stipends for employees

Travel and leisure time are essential ingredients for fostering employee productivity. Taking breaks from work and exploring new destinations or engaging in leisure activities rejuvenates the mind, reduces stress and enhances overall wellbeing. 

By disconnecting from the daily grind, employees can return to work with renewed energy, creativity and motivation.

Travel can also expose your employees to diverse cultures, ideas and experiences. This encourages personal growth, broadens their perspectives and helps them to understand and serve your customers better. 

It can translate into innovative thinking and problem-solving skills in the workplace, as well as improved focus, efficiency and job satisfaction.

In essence, investing in your employees’ travel and leisure time through a travel stipend not only promotes work-life balance but also cultivates a happier, healthier and more productive workforce.

It goes without saying, of course, that all this also helps you to attract and retain the best talent.

Unravelling the meaning of a travel stipend

Including personal travel stipends in your employee benefits package is still pretty new in the business world. It can often be confused with business travel expenses, which is a completely different offering.

To clarify, a personal travel stipend is a benefit that employees can use for their personal travel-related expenses. 

This might be hotel accommodation, flights, train fares or a taxi home from a night out—as the employer, you decide what kinds of expenses you want to include in your travel stipend policy.

How to calculate stipend pay

Let’s be honest, the last thing you want to read here is a complicated list of instructions and calculations.

In reality, you don’t need to do a lot of calculations to offer a travel stipend benefit. All you really need to do is find the right provider and decide how much you can afford.

Most companies that offer travel stipends as an employee benefit do so by means of an employee benefit platform. 

These offer support in setting up and choosing your benefits and allow your employees to access and spend them directly. This saves you and your HR department the hassle of keeping track of various receipts and reimbursements.

Another simple and effective way of offering this perk is to combine it with your business travel management on a travel platform like FREENOW.

FREENOW’s super mobility app puts your employees in control of their business travel with a range of standard and sustainable services that can be booked in the app. At the same time, companies benefit from effortless travel management that includes:

• a centralised platform

• automated digital expensing

• one monthly invoice

• ride-hailing and taxi booking

• in-app payment

• support for sustainability

• customisable travel policies

Learn how FREENOW for Business's travel solutions can help boost your business travel.