The employer's obligation to provide financial compensation to the employee for wear and tear on his own equipment

6.4.2020

I have already written about the fact that even working from home, the so-called home office, should operate on the basis of rules set between the employee and the employer and what the rules or requirements are, HERE.

We recommended the conclusion of a home office agreement, which can be concluded either as an addendum to the employment contract (here I pointed out the necessary control of the place of work) or as a separate agreement regulating the terms and conditions of work or an internal regulation can be used.

This article was written in 2020. If you are looking for up-to-date information on this topic, please do not hesitate to contact us at office@arws.cz or by phone on +420 245 007 740. We will be happy to advise you.

At the end of the article you will find our latest publication for download and you can watch our latest webinar.

In general, all costs associated with dependent work are borne solely by the employer. Therefore, it is the employer's responsibility to provide his employees, even those who work at home, with the necessary tools, machinery, equipment, and generally to create a suitable working environment for the employee. Similarly, the employer is obliged to provide the employees with the items necessary for the performance of the specific work.

However, if the employee uses his own equipment, software, typically a computer, printer, mobile phone, professional literature (dictionary), etc. (hereinafter referred to as "Equipment")in the performance of his work for the employer, his employer is obliged to compensate him financially for the use of this Equipment. This is on condition that the Equipment is actually necessary for the performance of the employee's work under the agreed employment contract and that the employer consents to the use of the Equipment necessary for the performance of the work.

The rules for determining financial compensation can either be established by internal regulation on a collective basis, where this method is typically applied where the employer uses the employee's Equipment to a greater extent, or determined individually prior to the performance of the work. If compensation is determined individually, the agreement between the employer and the employee must be in writing, under penalty of nullity.

The employer and the employee will be pleased to know that, provided that they are correctly calculated , compensation for wear and tear on the employee's equipment is not taxable, nor is it subject to social security or health insurance, to the extent that the employer would apply depreciation to comparable tangible property on a straight-line basis. For the employer, such compensation is a tax expense.

In particular, the following questions must be answered in order to properly calculate and determine the compensation for wear and tear on the employee's equipment:

  • How many days per month does the employee work at home, i.e., how many days per month does he use his home equipment?
  • Exactly what equipment does the employee use and what is its age?
  • What is the cost of the equipment?

The age of the equipment can be based on either the purchase price or the market price of the equipment. If the equipment has a purchase value of CZK 40,000 or more, then depreciation is used in the so-called depreciation groups, with reference to the Income Tax Act.

  • What is the age of the equipment and the estimated useful life of the equipment?

If I have a one year old laptop and the estimate of its useful life is for the next 3 years, I will use the laptop for a total of 4 years.

  • What is the ratio of work to personal use of the Equipment?

Now in an emergency situation, based on an 8 hour working day, we can talk about a ratio of, for example, 70% work use, 30% personal use. For this estimate, the answer to how many days a week the employee works at home, for example, must be taken into account.

All updated information related to coronavirus and emergency measures can be found HERE.

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