Should Employees Pay For Parking?

Should Employees Pay For Parking?
Should Employees Pay For Parking?

Not to beat around the bush, but the answer to this question is simple; it depends.

According to some laws, if you are required as a staff of an organization to use your car while doing your duties, it’s illegal for your employer to ask you to pay for parking. Most cities’ law requires that your employer pays for every cost incurred by an employee while discharging their work duties.

For so long, free parking, especially at work, has been a right for all employees that drive a car. But, lately, due to many concerns registered by business owners, there have been changes in these employee perks. If your employer decides to do this, even though they know what the law states, there might be a reason for that.

We may have to mention that if you are required to park on the street leading to your place of work and are likewise forced to arrive early, your employer may avoid costs accrued through parking but may have to provide other forms of compensation for the extended work time.

Still, if you do not need to use your vehicle as part of your job, you may be responsible for your parking fees since it’s not in the contract with your job role.

We know many employers who never charge for parking whether the employee needs to work with their cars or not as part of their job. These employers view these as fringe benefits, making employees happier at work since they don’t have to spend extra parking off-site. 

This post will examine why some employers do this and if it would work for your company.

Circumstances in which parking may not be viewed as a taxable benefit

  • The representative requires an automobile to drive to work daily because of an actual incapacity that limits mobility.
  • Parking space is accessible for free to both workers and the overall population, for example, in a mall or amusement park.
  • Parking space provided is scramble parking – this implies fewer parking spaces than workers wish to utilize a spot, and the spots are accessible on a first-come, first-served premise. There should be altogether fewer spots than workers wanting a spot.
  • Parking space is accessible for business purposes – the representative is consistently (on regular at least three days out of every week) needed to utilize a vehicle to discharge their work role, for example, traveling off-site to business meetings or administration calls.

Parking in the Public and Private Businesses

Charging employees for parking spaces is prevalent in public sector workplaces, especially in public hospitals, universities, and councils. However, this is rare in the private sector, yet both sectors face the same problem of insufficient parking spaces to meet demands at their sites.

When there is a greater demand for a service and a short supply, the service price goes up, and consumers are forced to decide if they are willing to pay for it or not, regardless of the increase; this influences the demand for the service.

Using workplace parking as an example, the demand is thin as we all know that cars have saturated the streets more than ever and will continue to increase. So in this instance, the company could require a high price. Hence, companies in the public sector then balance this charge with other added perks to retain and attract employees.

Why Are Companies Charging For Parking Space?

Let us look at why we believe companies charge customers for parking space and whether this is a good idea for your business.

Reduce Parking Demands

One of the most effective ways to ensure fewer people are driving to work is to charge employees for parking. Companies are starting to use this to cut down on parking maintenance costs, which is terrible news for employees who need accessible parking. As little as $5 daily can be terrible news for this set of employees, although it’s sure to reduce park usage. More so, businesses that wish to avoid being labeled as cash-hungry by their staff will consider using the new revenue to pay for their CSR projects.

Be that as it may, many employees will frown against this approach. Although eventually, they may realize how we get to work needs to change. Hence, if they wish to always park close to the office, they may have to pay for it to keep the space up and running.

Enabling New Motorists

It can be disappointing when you realize there is not enough space for an employee. One of the ways to fix this issue, especially for multi-tenant structures, is to use a parking management system like OPS-COM. We have a plan to provide your business with space-sharing features depending on demand.

Cost offset

Parking spaces can be expensive to manage for many companies. It can cost some companies up to $10,000 yearly to rent without any place to add this cost. Companies might pass this cost down to the employees.

Whether this works or not depends entirely on the employer and the employee. The company has to decide if everyone working there will be charged for parking. However, it would be unfair to the junior employee if asked to pay for parking while the senior management enjoys free parking.

If the company decides to take this approach, they have to ensure that everyone pays for their space regardless of their position at the office, which will benefit everyone. It doesn’t have to be an exorbitant amount as long as it offsets the cost of maintaining and renting the space.

Passing on parking costs to the exchequer

Attempting to stay informed concerning the global tax ramifications of employee parking is a job on its own. It is essential that commuter subsidies exist in certain nations and locales.

This implies that staff can claim back the expense of driving against their tax. Many organizations in these regions present parking charges. Generally, all they are doing is offsetting the cost of parking to the exchequer. Eventually, their representatives wouldn’t fret as they were not paying for it. By the day’s end, the expense is reconciled against their tax in payroll.

Regardless of who owns the parking space or ramp you use, parking can be costly. If your employer is asking you to pay for parking on its property, it may be advantageous to request that they investigate other options.

Those might include providing discounted tickets for any public transit accessible where you work or providing cash-out incentives to those who carpool.

If you are a business looking for ways to charge your employees for parking while providing other incentives to keep them happy, we are here to help. Our dedicated team members can provide answers to all of your parking concerns.

Reach out to us, and we will explain further how this can help revolutionize your business.