Should employers offer transit rebates in benefits?

A recent survey released by Robert Walters found commuting costs have become a pressing concern for employees, particularly as return-to-office (RTO) policies take hold, with 60 per cent of respondents who believe that commuting costs are the most important expense to be subsidized by employers.

Additionally, with 74 per cent of Canadian workers who consider commuting a major factor when evaluating new job offers, Martin Fox, director at Robert Walters Canada, believes employees are prioritizing commuting costs over other workplace benefits. Employers who fail to address this may ultimately struggle with retention and recruitment.

“During the pandemic, employees saved a significant amount, obviously, by not commuting, and that has made them acutely aware of the cost savings,” he said.

The financial burden of transportation, combined with increased costs post-pandemic has placed commuting expenses at the forefront of employee concerns. Fox emphasized that commuting isn't just about money; time and productivity also play a major role for Canadian workers.

Despite commuting being seen as “an unproductive time that could be better spent working on personal objectives or work,” some employees remain productive during their commutes, noted Fox.

“People probably work on their commute as well because they’re engaged and they want to make a difference,” he added.

With housing costs driving workers further from urban centres and employers pushing for a RTO, should companies be stepping up with transit subsidies or rebates? Fox acknowledged there’s a strong case for it.

“In the UK and Ireland, where commuting people go much longer distances, the costs are more expensive, but it’s almost part of everybody's package,” he said.

While such benefits are far from standard in Canada, Fox said offering them could help provide a competitive advantage.

“Offering transit rebates can be a competitive advantage in attracting and retaining talent,” he said. “In the current market here in Toronto, very few people do it so you could get ahead very quickly by doing that.”

He added transit rebates could also have broad benefits, improving employee morale and demonstrating employer flexibility.

“It pieces into another wider topic around customizing benefits, which is a really hot topic right now.”

More personalized benefits, based on employee needs, could help companies retain talent in a tight labour market. He also noted that in the long run, such investments could reduce turnover, ultimately saving businesses money.

When asked what an appropriate transit benefit might look like, Fox acknowledged the lack of benchmarks in Canada. However, he suggested companies conduct companywide surveys to understand what employees are spending and what kind of support would be meaningful.

He also pointed back to models in Europe where transit benefits are structured as tax-efficient deductions from employees’ monthly or bi-weekly pay checks, adding “it’s a tax-efficient way of contributing to their transit pass,” he said.

With workplace benefits evolving, Fox noted that commuting costs have overtaken other workplace priorities, including tech stipends and wellness programs. He believes a key factor is the resistance to return-to-office mandates among employees who moved farther away during the pandemic and now face longer, more expensive commutes.

“A lot of people made a decision on their own during COVID to move outside the city without any guarantee from their employer that their return-to-work plan wouldn’t come into place,” Fox noted, while emphasizing this has led to some tension, as companies enforce hybrid or full-time office returns.

Commuting costs also have an immediate financial impact, unlike benefits such as free lunches or wellness programs.

“You can control your spend on lunch, you can’t bring your own train,” Fox said.

While hybrid work has eased the financial strain for some employees, it hasn’t eliminated the overall issue. There are already several factors at play that are making commuting more expensive, like fuel costs and rising public transit prices, which are adding to the commuting burden.

Fox acknowledged most people who don’t have the luxury to live near a train line are still commuting by car and presents its own cost concerns, including maintenance, insurance, and parking fees.

Employees are also now traveling longer distances due to housing affordability issues in metropolitan areas.

“People who have moved to more affordable areas outside of the GTA face longer and more expensive commutes, more disruptive commutes and slower ones as well,” Fox said, pointing to infrastructure challenges, adding that transit options haven’t kept pace with demand.

While some employees would prefer to relocate to smaller cities and work remotely, the reality is more complicated, with options becoming scarce, including fully remote opportunities, particularly in Ontario.

“Three or four years ago, it was just abundant,” he said.

Now, many companies are tightening their policies, limiting the career options for those who want to remain remote.

Fox ultimately sees commuting benefits as a missed opportunity for many Canadian employers because as additional findings from Robert Walters found, workers currently spend approximately 13.6 per cent of their annual salary on commuting costs.

“Eighty-eight percent of professionals receive no commuting support from their current employer,” he said. “That’s not normal. Understanding and addressing these concerns can significantly enhance the satisfaction and retention [among employees].”