An array of allowances
In addition to a basic salary, companies provide employees with another form of cash award. This is included in the employee’s remuneration package and are what we refer to as ‘allowances’.
Allowances are given for different reasons however its aim is to support the employee in paying for anticipated expenses. This article provides a list of possible allowances which an employer may choose to give to its employees. This list isn’t exhaustive. These are typically found in local organisations and some are more popular than others.
Expenditure allowance
This is usually paid upon presentation of receipts and is a reimbursement for expenses made by the employee, on behalf of the company or as a result of their position within the company.
Fuel allowance
If an employee is required to use his/her car for work purposes (such as attending meetings at clients), then companies tend to compensate for the fuel that is consumed. There are different ways of going about this. The employer may decide to reimburse the employee’s fuel upon presentation of receipts or simply gives a fixed monthly allowance. Companies also base it on a preset mileage rate and the employee gets paid according to the mileage carried out during the month.
Clothing/uniform allowance
Employees who are required to wear special clothing for work are given an allowance which covers part or the full expense of the clothing purchased. Again, this may be either as a form of reimbursement or a fixed amount paid to all employees who are required to wear such clothing.
Car maintenance allowance
If a car is used excessively for work purposes, then the company may decide to give an allowance to the employee which covers any maintenance and service the car requires. Some companies also pay for the annual insurance cover and licence.
Qualifications allowance
This allowance supports an employee in his/her professional development. It gives employees an allowance once s/he has obtained the qualification. The type of qualification obtained is generally discussed with the employee beforehand, or alternatively, a policy would state what type of qualifications are deemed applicable for this allowance to be provided. This allowance is usually not a one-time allowance but paid on an annual basis.
Shift allowance
Employees who are required to work on a shift basis are given a shift allowance. This allowance varies if the work is performed in the morning, afternoon or night.
Disturbance allowance
Employees may be given such an allowance if they are required to work outside their normal working week.
Special skills allowance
Employees who have a particular skill which the company is benefiting from (an example would be a heavy vehicle driver) are usually also given an allowance. This may be in the form of a reimbursement for the special licence they require in order to perform their work.
Service allowance
Businesses may also decide to give allowances to their employees based on the number of years they’ve given service to the company. This may not necessarily be in the form of cash but can also be given as gifts. It can also be graded according to the number of service years.
SurgeAdvisory offers support to companies by providing advice and guidance on compensation and reward topics. Contact us on [email protected] for more information.
About the author
Maria Bartolo Zahra is Managing Director and HR Advisor at SurgeAdvisory. She has over fifteen years of human resources and business advisory experience.