Everything You Need to Know About Employee Stipends

Everything You Need to Know About Employee Stipends
May 1, 2023
9 min read
May 1, 2023
6 min read

If your job grants you some employee perks, stipends might be one of them. While a stipend is still money you get from your company, it's different from your regular salary.

A stipend is an allowance provided to employees for specific categories.

Many companies and institutions provide stipends to their employees for different reasons. This article covers all the information regarding employee stipends, their categories, benefits, and differences from regular salaries.

What Are Employee Stipends?

Employee stipends are famously known as fringe benefits or lifestyle benefits. You can consider them an allowance in the form of a specific amount of money. Your employer will pay you a fixed amount according to your work. 

It is a help for living expenses, wellness, work, and many other things. Many HR teams set a flat amount as a stipend for various needs. Numerous companies are adopting this trend, especially as the number of work-from-home employees increases.

However, do not confuse employee stipends with the traditional stipend companies give interns and apprentices. A traditional stipend example would be a small amount given to new workers or interns to substitute for an actual salary.

What Is an Example of a Stipend Policy?

Employee Stipends Programs

An organization can offer a stipend policy for various things. 

For example, the company can offer a health allowance stipend if it is not providing health insurance. A sample stipend policy for health is Microsoft's. The company offers an $800 wellness stipend to its employees every year.

Some offices also give a stipend for academic research or professional development. LinkedIn is one of those, with an education reimbursement of $5000 plus several other perks.

An organization can achieve multiple benefits along with the trust of its employees by providing stipends for various things.

What Are the Benefits of Offering Stipends?

  • Trust and Loyalty

The main benefit of offering stipends is gaining the trust and loyalty of employees. While people look for good jobs, employers also want the best employees. Providing allowances is a fantastic way to cultivate good employees and provide an excellent working environment that'll make people want to stay. 

  • Reputation

Jobs at Amazon, Spotify, and Salesforce are some of the most sought-after roles, not just because these companies gross billions yearly but also because they offer amazing work cultures. Part of cultivating a good work culture is utilizing stipends to meet some of your employee's needs.

If you can provide stipends that make your employees' lives easier, your company will eventually develop a reputation as a fantastic office. Once you do, it may become easier for you to fill open roles. You won't be looking for talents anymore; they'll come to you.

  • Productivity Boost

Did you know that happier employees work better and faster? Numerous studies prove this with productivity boosts ranging from 13 percent to 20 percent.

Stipends are one way you can boost happiness at work. It doesn't even have to be a massive amount. A $20 gym allowance every month will draw appreciation. Allowing employees to accrue vacation time on the pay stub is another way to incentivize employees.

  • Customized Stipend Policies

A company sets and disburses typical salaries according to industry policies. However, you can customize the stipend program according to your company's policies.

You can decide who is eligible for your stipend and whom to give allowances. An organization can adopt stipend policies according to the needs of their business, their employees, and the prevailing laws and society. 

If the organization needs academic research, it would need research students or scholars to reach its goal. Therefore, it makes sense for the company to provide a stipend supporting further education in that field for employees.

When and Why You Should Offer Employee Stipends

There are many ideal times to offer employee stipends.

  • During dire periods such as pandemics and epidemics.
  • If an employee is interested in furthering their education in a field your company needs.
  • During times of financial and economic hardship
  • During times of strain in the company due to ongoing projects
  • You can also offer stipends regularly to offset some costs for your employees.
  • If an employee meets difficulties at work, the company should have an employee compensation plan readily available.

Why you should offer stipends:

  • To build trust and loyalty among your employees
  • To better the relationship between employer and employees
  • To help boost productivity among workers
  • To encourage drive and competition among employees

There are multiple reasons why you should offer employee stipends. However, we have mentioned a few for your understanding.

How to Plan and Manage Employee Stipends Program

Many organizations consider the employee stipend program as a new concept. This guide will provide steps to help you plan and manage employee allowances.

  1. Goals

The first thing you need to do is to plan your goals. You must understand what you want to achieve for your employees and, eventually, the company.

List your goals; whether you want to recruit new employees or offer a stipend to make your employees stand out against the competition in the market. Shortlist the ideas on paper before further planning.

  1. Benefits Package

With your goals in mind, you must create a package that benefits your organization and employees. Also, it should not burden company finances.

Make benefit packages according to the demand of your employees and the organizations. You can also create different benefits packages for different roles according to their work, profession, and needs.

  1. Communication

The next step is to communicate the new benefits to your employees. You can send a company-wide announcement containing all stipend details, its type, requirements (if any), and benefits to the employees. This way, your employees can start applying if they meet the criteria or, if they don't, make preparations with the goal of meeting them.

  1. Distribution

To distribute stipends, you should ask your employees to submit their expenses and approve them according to your policies. Evaluate the documents and pay them through checks or payrolls.

Many employers like to add another section to the employee pay stub. However, you can also pay them separately through a check or cash.

  1. Analysis

The final step is to analyze your investments. You need to monitor the employee's participation and engagement toward the company’s progress and achievements.

You also need to discern the stipend type that proves most beneficial for the employees and the company. Is the allowance amount enough for your employees? How much are they spending from the stipend? What's the return on investment for the program? How long does it take before the company sees returns?

These things will help you to analyze your plan and the effectiveness of your allowances. As you continue to offer the stipend and watch its effect, you can determine if you want to modify, scrap, or keep it as is.

Popular Types of Stipend Policy

Popular Types of Stipend Policy

There are many different types of stipend policies. Here are a few of the most popular ones.

Academic Research Stipend

It is one of the most famous stipend types and has proven helpful in boosting focus and efficiency. If you are hiring for a research role where you need a student or scholar, an educational stipend is the way to go. It will help them gain knowledge they can use in the future and also learn new skills that'll be useful to the company.

Job Training

Many companies provide job training for new workers. In some organizations, it is more like a probation period. Although there's no salary just yet, the stipends can help carry some of their expenses till they prove themselves an asset to the company.

Internships and Fellowships

Many organizations and educational institutions provide stipends for internships and fellowships. A paid internship can help an internee to become a full-time employee of the company. Additionally, fellowships offer financial aid to students working on research work or performing other services.

Health Insurance

Health insurance is a famous kind of stipend that is popular for many reasons. Many employers provide health stipends to their employees, which can help during a medical emergency. It eventually increases the work efficiency of their company.

Wellness and Lifestyle

Many companies offer different stipends for the wellness of their employees. For example, they pay for a gym membership or other activities encouraging fitness.

Living Cost Stipends

These stipends are usually available for interns to cover their daily expenses, from traveling to living. Since many companies provide full-time jobs to their interns, they help them with stipends to increase their focus and interest in the company and job.

Travel and Food Stipends

A meal allowance is one of the best ways to ensure that your employees eat good food on behalf of the company. The same goes for the travel allowance, as the company covers the expenses, so the employees have quality and safe travel.

Smartphones Insurance

Some companies provide smartphone insurance to their employees after providing them with phones from the company. If any damage is done to that phone during working hours, the company will pay to cover the damage.

WFH Stipends

Work-from-home (WFH) stipends are provided to employees in addition to their base salary to improve their remote work and make things more comfortable. WFH stipends have become quite popular recently and a mandatory benefit for remote employees.

Miscellaneous Stipends

This stipend is provided to employees traveling to foreign countries for the sake of the company’s work. Miscellaneous stipends help them cover those expenses, or if the employee pays from their pocket, the company can reimburse them.

Stipend vs. Salary

A stipend is different from a regular salary. Companies are bound to give regular salaries according to industry demand. However, a stipend is a kind of allowance that depends on the policies and expenses of the company.


Are stipends paid through payroll?

An employer can pay a stipend through a check, cash payment, or payroll. 

Are employee stipends taxable?

Stipends differ from regular salaries or wages, so you don’t have to file taxes for them.

How do employers report stipends?

An employer can report stipend through Form W-2 or Form 1099-MISC.

What are the benefits of a monthly stipend?

The most significant benefit of employee stipends is that you don’t have to pay tax on it as it is considered an allowance instead of regular pay or wages.

Is a stipend better than a salary?

A stipend is lower than a pro-rata salary, but if your employer provides allowances alongside regular pay, it's a better deal for you.

Can a stipend be treated as a salary?

No, a stipend should not be considered a salary. It is an allowance given along with the regular salary.

Final Thoughts on Employee Stipends Policy

And that is everything you need to know about employee stipends. If you discover your company offers stipends and can apply, ensure you do. Collecting allowances with conditions can set you up to achieve your goals without paying huge sums.

However, don't forget to ask management more detailed questions, like how often a stipend is paid, and get all the information before applying for anything.