Home Professionalisms 5 Reasons Why You Should Provide Stipends To Your Employees

5 Reasons Why You Should Provide Stipends To Your Employees


Nowadays, businesses have to face the truth that it’s just not enough to give employees their proper wages. If you wish to retain the team you have and keep them happy, it’s essential to go a step higher with the benefits they ought to receive. This doesn’t just keep employees motivated, but providing beyond just the basic salary also enables your business to attract the cream of the crop come hiring season.

However, as effective as employee benefits may be, you’ll also have to be careful about selecting the right ones. These come with a cost, so you’ll want to ensure that the employee benefits you’re providing are truly those that are needed and well-appreciated.

One of these are stipends. This refers to a fixed amount of money that your company will provide to your employees to offset certain expenses such as education, housing, and food. Depending on your company policy, this stipend can be grounds for exempting your employee partially or fully from salary employment.

That said, there are many benefits that your company can gain from giving out employee stipends. This article explores some of those.

1. It Adds To The Skills Of Your Employees.

This applies when you’re going to provide your employees with an educational or tuition stipend. This stipend partially or fully compensates for the educational expenses of your employees so they can further their academic learning.

The educational stipend you give can be considered an investment for the skills of your employees. As they improve, they also work to be better assets for your company. Because of the new and improved skills that they’ve brushed up on, they can apply these towards the success of your business every day.

2. It’s Non-Taxable.

Everyone loves receiving benefits or cash benefits that aren’t taxed, especially employees. In a way, this can also be considered as added savings for them. A stipend isn’t counted as wages earned, so the employee will not withhold any taxes for this.

However, keep in mind that there are certain requirements that must also be met for employees to receive a tax-free treatment for the stipend. These include the following:

  • The education obtained by the employee is necessary for the skills required in the employee’s present job.
  • The education is necessary for the employee to keep their current job, salary, and status.

3. It Enables You To Retain Good Talent.

While there are so many potential employees seeking jobs, this doesn’t mean that all of them are going to end up as assets to your company. Some are merely going to stay mediocre, or are content with performing just the routine tasks. On the other hand, there are also those who are more than willing to give beyond the minimum effort required. The latter makes up the workforce that become assets to your business.

However, for you to acquire more of the talented assets, you need to give employees a reason to choose your company and stay. This means doing everything you can to get the most talented of the potential hires onboard your team.

Apart from offering an above-average salary, other benefits such as stipends are a good way to entice them. Then, once they’re a part of your company, they’re also more inclined to staying because of these benefits.

4. It Keeps Employees Healthy.

No matter how sharp the mind of an individual is, if they’re consistently unhealthy, they can still cease to become great members of the team. Remember that employee absences can also account for losses as the operations of the day may be disrupted.

Offering stipends for health insurance or other health factors such as gym memberships can encourage employees to stay on top of their health. Because your company now covers this, this means there’s absolutely no reason for them at all not to be health-conscious.

More importantly, when you take care of your employees’ health, they also end up happier. It’s not only their physical health that gets affected positively, but their mental health as well. In effect, they become more focused and productive with their job.

5. It Results In Higher Level Output.

While money isn’t everything, you also can’t deny that it’s still one of the best ways to motivate employees to work harder. When you give your team average pay and benefits, then expect an average output, too. But when you go the extra mile in making your employees feel like they’ve made the right choice in joining your company, you can expect them to also do more than what’s required.

In effect, providing stipends to employees can encourage them to generate a higher-level output. This can be especially true when your employees see that the stipends and other benefits you’re giving them are not being offered to employees of other companies. This compels them to work harder and appreciate the job they have.

6. It Boosts Employee Morale And Happiness.

Employees also become happier when they feel like they’re in an organization that fosters growth. It’s important that they feel like there’s room for their skills and career to improve, instead of thinking that their job is a dead-end, professionally and personally. If a company invests in an employee’s skills and helps them enrich these, then their morale improves.

When employees have that positive feeling, they also begin to trust your company more, and believe that you’re both working hand-in-hand towards success. It’s not just them working hard for you with their efforts going unnoticed. With this, employees also become more engaged in their day-to-day work tasks.


All these said, your company should now look into the ways you can restructure your employee benefits program. Remember that, today, employees aren’t merely looking to stay in one company that doesn’t provide any growth. They also look for stability, career development, and academic learning on top of the job they do for you. If you wish to attract and retain good talent, you may want to look into providing company stipends. It may be an added cost, but it’s a worthwhile investment for your employees.