The new coronavirus pandemic has forced many companies to review their forms of organization, with impacts on labor relations and the day-to-day lives of employees.

According to data from the PNAD-Covid survey, conducted by the Brazilian Institute of Geography and Statistics (IBGE), in the week between May 3 and 9, approximately 16 million people were on leave from work due to social distancing.

There was also a significant expansion in teleworking, which, according to research data, has been constantly practiced since May of 2020 by approximately 8 million people in Brazil.

In this scenario, what about employers' responsibilities to their employees? Should the employer bear the costs of teleworking?

The Consolidated Labor Laws (CLT), by regulating the subject, expressly establish that employee and employer must agree on bearing costs related to telework (electricity, internet, telephone, among other items).

Unless the collective bargaining agreement applicable to the parties provides otherwise, the laws and regulations provide that they may agree upon who will bear the costs related to teleworking.

The laws and regulations in force (unless otherwise provided for in the applicable legal instrument) do not oblige the employer to bear such costs. However, this is a good practice that not only mitigates the risks of legal claims on the subject but also, to a certain extent, ensures that employees have adequate infrastructure to work.

If the company therefore opts to reimburse employees for costs related to teleworking, one option would be to make payments as reimbursement of expenses. In this case, employees must submit an expense report, with the respective receipts, to enable reimbursement of amounts by the employer.

Although apparently simple, reimbursement requires internal structures and control of receipts, which can generate overhead costs for employers. In addition, there are situations in which it is difficult to identify what proportion of a certain cost actually relate to professional activities and what is pertinent to employees' personal expenses, which will require greater scrutiny by employers and additional structure for review and approval of reimbursable expenses.

As a simpler alternative to reimbursement, employers can choose to pay a lump sum monthly cost allowance to employees to offset expenses incurred working, without the need for supporting documents.

There are relevant advantages to this alternative. Initially, and subject to the recommendations that will be addressed below, discussions on the nature of the expense being borne by the employer (if intended for strictly professional use or if it includes a percentage for personal purposes only) are avoided. The reimbursement of expenses of a strictly personal nature, not related to work, may generate labor, social security, and tax repercussions for employers even if, potentially, in non-material amounts.

Another advantage is that cost allowances, as a result of the changes introduced by Law No. 13,467/17 (the Labor Reform), as well as reimbursement of expenses, is not, as a rule, included in the employee's remuneration and, therefore, is not subject to labor and social security charges, although it is paid in a usual manner.

In addition, article 75-D of the CLT establishes, in its sole paragraph, that the infrastructure and technological equipment necessary and appropriate for the provision of remote work provided by employers are not part of employees' remuneration.

In any case, it is not only the title given to the payment that guarantees its compensatory nature. In order for the cost allowance not to have the nature of salary, the amounts should (i) be paid only to employees who incur expenses (for example, the internet allowance is only justified while the employee is working remotely); and (ii) keep a direct relationship with the employees' expenses, considering market averages.

In view of this, it is advisable to establish parameters for payment of the cost allowance if the company chooses to bear the costs arising from the remote work when drawing up internal policies to regulate remote work.

An alternative to regulating the payment of the daily allowance is negotiation of collective bargaining agreements with professional unions. Banco Bradesco, for example, entered into a collective bargaining agreement with the Bank Workers' Union which, in addition to regulating remote work, provides for the payment of a cost allowance to employees in this arrangement.[1]

Formalizing payment rules and criteria for defining the amounts to be paid as cost allowance reduces the risk of legal questioning as to the nature of the payment and is important to mitigate the risks involved.

Before reaching any decision regarding the implementation of one model or another, companies must analyze what is best for their business taking into consideration not only the labor and social security issues, but also the tax issues involved.