Six Facts on Employee Allowance

"Employee allowance is a universal benefit awarded to employees in the various levels in an organization."

Employee allowance is a universal benefit awarded to employees in the various levels in an organization, and with variations depending on a country, corporate culture, amount, and a company's financial stability, among other working factors.

You may be familiar with your own employee allowance and fringe benefits, such as rice allowance, performance bonuses, transportation allowance, and the like. Governments typically hold off taxes on employee allowances as they are considered benefits separate from your earnings and because a company reserves the right to change the benefits it gives to its employees at any time.

Here are other important things you should know about your employee allowance:

1. They are non-taxable. Allowances for employees are exempt from tax, such as clothing, mileage, or meal allowances. Fringe benefits are also included in this tax exemption, and this holds true in most countries where companies provide allowance to employees.
   
2. They come in different forms the most common would be clothing allowances, meal allowances, transportation allowances, while extravagant companies can offer discounts on health insurances, and give fringe benefits to executives, such as private use of the company jet, grand vacations, use of company fitness facilities, and other such privileges.
   
3. Employee allowances are exempt from tax if they do not exceed the price ceilings set by law.
   
4. Fringe benefits that exceed the price limit on benefits are no longer tax-exempt, and the benefactor is the one to shoulder the tax imposed on it.
   
5. Only the "de minimis" benefits with small value and limited only to facilities and privileges your company furnishes you with to promote goodwill, health, efficiency, and contentment to your employees.
   
6. Employee allowance is given at a company's discretion and goodwill - it is not a law-mandated benefit. Thus, you cannot demand it from your company if it does not provide any to its employees. Many companies, meanwhile, use employee allowance to compensate for lower pays and to appease employee demands for higher wages.

As not all companies furnish employees with employee allowance, and other companies use it as a scheme to delay or forestall any wage increases. Be sure to distinguish between mandated benefits and employee allowances.

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