Adapting Employee Benefits and Compensation to Meet Dutch Commuting Regulations

As of 1^st July 2024, organizations with more than 100 employees will be required to report their CO2 emissions related to work-related mobility, including both business travel and employee commuting. Given that business travel makes up more than 50% of the kilometers driven not only in the Netherlands but globally, the Ministry of Infrastructure and Water Management is keen to know how much CO2 is emitted by business travel and employees commuting.

This article will focus on adapting to this regulation and revising travel cost reimbursement policies to ensure a competitive benefits and compensation structure for employees in the Netherlands.

Key Dates and Reporting Obligations

1. From July 1^st, 2024: All organizations with more than 100 employees will begin to record relevant data on work-related CO2 emissions. This should be submitted by Jun 30^th
2. By June 30^th, 2025: You must report the data for either the second half of 2024 or the entire year of 2024. This data will be submitted online through a designated portal which will require an eRecogonition (eHerkenning) for access.

Voluntary Reporting.

Organizations with less than 100 employees can voluntarily submit their data. This will help smaller businesses to track and manage their CO2 emissions related to employee mobility, offering an opportunity to align with sustainability goals even before mandatory regulations apply.

Monitoring and compliance

The environment agency will oversee compliance with this reporting obligation, ensuring that data is accurate and timely. Failure to comply would result in enforcement actions, including financial penalties.

Other commuting and service travel policies in the Netherlands

Currently, it is required for employers to offer a tax-free allowance to employees for their work-related travels. This covers all forms of transportation including, private cars, public transportation, biking, or walking. This law allows for a maximum tax-free allowance of €0.23 per kilometer. This can be revised based on how often an employee travels, if they change addresses and with the rise of remote work, employees need to prove if they commute at least 128 days in a year.

Travel Allowance=0.23×distance (km)×2×214 (working days)

Credits: Freepik

Reimbursement of Public Transportation Costs

Employers can either cover the full cost of the public transport or they can fund the public transportation subscription. If employees provide proof of travel such as tickets, travel records, etc, they are entitled to tax-free reimbursements. This is sometimes proved to be time-consuming but allows for full cost overage.

NS-Business card

The travel business card offers a more convenient solution for commuting, giving employees access to multiple transportation modes, including bikes, trains, businesses, or carpooling options. The invoice is centralized, reducing administrative work/ However, the benefit remains tax-free only if the card is used for business trips or commuting as evidenced by the record.

Company cars

If most of the roles require frequent travel, providing company cars to employees is advisable. Most businesses have lease agreements depending on various factors, including car model, fuel type, mileage, and contract duration. Leasing is usually preferred as it reduces company costs while maintaining employee service levels. Employees who use the car for personal trips exceeding 500km annually must pay a tax, processed through their payroll. The tax base is determined by BPM, CO2 emissions, and the car’s list price.

Credits: ns.nl

Enhancing Employee Benefits to Align with Dutch Commuting Regulations

As an international company expanding into the European market, particularly in countries like the Netherlands, it is important to adapt your employee benefits to comply with the local regulations. To ensure that your organization aligns with the new regulations in the Netherlands, you might consider following some of the practices below.

Carbon offset programs:

This program allows companies to invest in environmental projects that reduce greenhouse gases, balancing out emissions generated by employee commutes. Companies can purchase carbon credits on behalf of the employees or offer employees the option to contribute to carbon offset programs, potentially matched by the company.

Flexible work hours and remote work

Flexible work hours and remote work options are important strategies for reducing commuting emissions. By allowing employees to work from home more frequently or offering flexible start and end times, companies can reduce the number of trips employees need to make to the office. This will not only appeal to the government's goals of reducing CO2 emissions but also appeal to the employee demands for work-life balance.

Financial incentives for low-emission commuting

Financial incentives can be a great tool to encourage employees to choose low-emission commuting methods. Consider providing subsidies for public transportation passes, bike-sharing programs, or even grants for purchasing electric vehicles. For employees who walk, or bike to work, consider having a wellness bonus that serves as both a health and sustainability incentive. Further, consider, having charging stations for electric vehicles. This will motivate employees to switch from traditional cars to electric cars.

Commuting reimbursement adjustments

With the new regulations, companies should consider reassessing their commuting policies. Reimbursements would need to be adjusted to reflect remote working patterns. Companies can consider providing higher reimbursements for using sustainable commuting methods. To ensure that employees understand their benefits, and to be compliant with new Dutch rules, it is important to calculate the commuting costs and reimbursements under new hybrid work models.

Education and communication.

It is important to constantly educate your employees on the benefits of low-emission commuting. Provide workshops, informational sessions, and clear internal communication channels that can help the employees to be aware of the changes and how they can participate in these initiatives.

Credits: Freepik

How to develop and design an attractive benefits and compensation strategy for my employees

The new Dutch regulation on CO2 emissions requires a thorough reassessment of your benefits and compensation policies, particularly regarding employee commuting. Employers have a significant opportunity to support CO2 reduction by promoting sustainable travel options such as remote work, public transportation, cycling, and electric vehicles. By implementing these practices, companies not only comply with regulatory requirements but also enhance employee satisfaction with flexible and eco-friendly commuting solutions.

To navigate these changes and ensure your benefits strategy is both competitive and compliant, EuroDev offers comprehensive consultancy and tailored advice. With 27 years of European HR experience, we specialize in aligning compensation packages with local regulations and cultural expectations. Contact EuroDev to learn more about how we can support your transition and elevate your European talent strategy.