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Benefits and allowances

An employee is not entitled to be paid allowances over and above salary and wages unless these have been agreed with their employer.

Employee’s entitlements to allowances over and above salary or wages

There is no specific legal entitlement to allowances. The payment of and level of allowances, over and above salary or wages, can be agreed to by the employer and employee. Generally, allowance payments are used to recognise:

  • extra qualities or skills an employee brings to a job
  • special responsibilities an employee may have taken on (eg leading hand or supervisor)
  • any unpleasant or inconvenient features of their work.

Allowances may also be paid to an employee to reimburse them for costs or expenditure incurred on behalf of the employer.

If an employee incurs a cost on their employer's behalf it is good practice for the employer to reimburse or compensate them. If allowances are a regular feature of a job, it’s a good idea to have them clearly specified, either in an agreement or in a workplace policy, so that it’s clear for everyone about when and how they apply. 

An employer should also check with Inland Revenue (external link)  on the payment of allowances, and which ones are taxable and non-taxable. 

Employee’s entitlement to be paid for travelling time

Whether or not an employee is entitled to be paid for travelling time will depend on the circumstances, and the employment agreement or workplace policies, (with the exception of home and community support workers if the Home and Community Support (Payment for Travel Between Clients) Act 2016 (external link) applies).

If the employer and employee have agreed that travel during working hours is part of an employee's normal work, then the employee should be paid for the time they take, for example, to travel from one worksite to another.

Payment for travel time in other situations is to be agreed between the employer and employee, for example, payment for travel time to and from home.

In addition to travel time, the employer and employee may agree to reimburse travel expenses, for example, when an employee has to work away from their normal work site, it may be agreed that the employer will reimburse use of their personal vehicle or other means of transport to travel to that site.

It’s best practice to discuss these issues and make sure that anything agreed is put in writing, so that everyone is clear about when and how travel time and/or expenses are paid.

The Inland Revenue website (external link) has schedules of kilometre allowances.

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