There are many sides to the subject of travel between home and work. There is an urban planning element: designing transport infrastructures that allow optimum journeys between homes and businesses in complex and dense urban areas, or conversely in fragmented ones. There is an economic aspect: allowing companies to access the widest possible labour pool. There are also social considerations: reducing journey time (work/life balance) and transport costs (purchasing power) for employees. In addition to these traditional stakes, there are also environmental concerns: in Europe, the majority of journeys between homes and workplaces are made by car, meaning that this travel accounts for a large part of companies’ carbon footprints.
Increasingly, the question is therefore shifting into the domain of corporate social and environmental responsibility (CSR). For example, in France the Gilets Jaunes (Yellow Vests Movement) crisis is an excellent symbol of this tension between the environmental (fighting global warming) and the social (combating inequalities). The beginnings of a solution to this can be found in measures encouraging the use of eco-friendly transport.
Let’s review the situation in Europe on this essentially HR theme.
France: towards aid for eco-friendly transport
The first transport aid measures for employees (public and private) go back at least as far as the immediate post-war period, although at this time they concerned only Parisians. From 1948, Parisian employees received a transport allowance, which their employer was obliged to pay. This allowance increased in 1950 and 1960. An initial attempt to extend it by law to all French employees failed in the early 1960s.
In 1982, the allowance was replaced by an obligation for the employer to pay 40%, then 50% (from 1st October 1983) towards the RATP public transport pass – still exclusively for Parisians. Nevertheless, this obligation was extended to “any public or private natural or legal person employing one or more employees” in the zone concerned. A decree of 18 October 1982 adapted the measure to public servants in Paris.
It was not until 2006, when oil prices rose, that the authorities again took an interest in the matter. Thus, with the law of 30 December 2006, the short-lived “transport cheque” system was born. Following the model of the “restaurant ticket”, these vouchers allowed (but did not oblige) employers to provide tax-exempt aid for employees all over France. The scheme didn’t catch on, and from 2008 the government of François Fillon adopted a different approach, extending the Parisian system to the whole of France.
The law of 17 December 2008 made it mandatory for all public and private employers in France to pay half the cost of the transport pass required by employees. After a few months’ delay, a decree of 21 June 2010 set the same rules for public servants.
Behind this decision to reimburse transport passes, there was (among other reasons) already an environmental motive: to encourage the use of public transport. Meanwhile, employees with no other option but to drive could benefit from tax-exempt contributions to petrol costs, if their employer desired. This meant that the State only helped drivers with no alternative, without imposing any obligations on companies. The legislator specified that the measures also applied to electric vehicles.
Finally, the 2008 law introduced another innovation: covering half the membership cost for a bike-share service. Paris, for example, had just adopted the “Vélib” bike-share service, two years after Lyon and a few other cities. The policy was therefore clear: to encourage the lowest carbon modes of transport.
The creation of the kilometric allowance for cyclists, in 2015-2016, extended this trend. It was the law of 17 August 2015 on the energy transition that introduced the principle of this allowance. Consequently, since 2016, users of bicycles and electric bikes have been able to claim 25 euro cents per kilometre, if a collective agreement stipulates this. However, the limit for tax exemption is quite low: €200. This aid can be claimed in addition to the transport pass where a bike is used as a complement to public transport. The aim here is to encourage multimodal transport. For example, there are fiscal incentives for companies to maintain bike fleets for employees (25% of the expenditure can be deducted from the sum of corporate tax, at least until 31 December 2021).
However, public servants are not so well off: only civil servants working for the Ministry of Sustainable Development and Housing or for the associated public bodies benefit from a similar scheme, under an experiment that will draw to a close at the end of 2019.
It is worth remembering that employees can also choose to have the costs of driving between home and work deducted from their taxable income, for one return journey totalling up to 80 kilometres per day. The deduction is made according to a kilometric scale. However, it is only available to taxpayers who opt for real costs rather than for the 10% flat-rate deduction.
Concerns surrounding purchasing power and environmental issues have therefore come together, since 2006, to encourage legislation that favours the development of “green” transport between home and work.
How do other countries in Europe approach this issue?
Where should we look for examples of experiments to encourage eco-friendly transport? Strangely, not Germany, despite its well-established tradition of green policies. The prevailing principle in Germany is one of tax deductions for employees that are proportionate with the distance they travel between home and work. Whatever mode of transport they use, the employee can (currently) deduct 30 euro cents per kilometre between their home and their workplace. This system, which can be traced back to the 1920s, leaves no room for tax incentives, which in Germany would undoubtedly be seen as incompatible with the principle of tax equality.
Belgium and Luxembourg: The emergence of a comprehensive tax incentive system
The situation in Belgium presents a strong contrast. On the one hand, Belgium was one of the first countries to offer a kilometric allowance for cycling between home and work. The scheme, which was introduced in 1999, allows employers today, if they wish, to pay cyclist employees 24 tax-exempt euro cents per kilometre between home and work (with no upper limit). In 2018, almost 550,000 employees in Belgium benefited: nearly 13% of the employed population.
On the other hand, the country continues to suffer with a tenacious exception: the prevalence of company cars. A favourable taxation system leads employers to offer salary increases in the form of company vehicles. This arrangement is financially beneficial for both parties. Company cars therefore represent over 20% of automobiles, and 40% of the (very dense) Brussels traffic at rush hour!
In response to this problem, the authorities have devised two solutions. The first, introduced in 2018, is referred to as “cash for car”. As its name suggests, it involves employers proposing a transport allowance instead of a company car. The programme has struggled to get off the ground, with just 0.14% of cars returned by September 2019. Since March 2019, another, more promising, solution has been introduced: the “transport budget”, in which an annual sum is allocated to the employee to fund their travel between home and work, provided they choose an environmentally friendly solution (an electric bike, a public transport pass, or… an electric car). It is therefore still possible to have a company car (electric, in this case), which undoubtedly explains the greater success of this system. With the transport budget and the kilometric allowance, Belgium has thus established a comprehensive incentive-based model, based on voluntary employer participation.
Neighbouring Luxembourg faces a similar situation: company cars remain fiscally advantageous there, despite being taxed. The authorities have reacted by introducing aid for the purchase of electric vehicles and bikes. Companies can also make bikes available to employees without this benefit being taxed (unlike company cars). The scale applied for company vehicles differs, according to their environmental impact. There is therefore a whole arsenal of incentives in favour of eco-friendly transport between home and work.
Buying bikes via employers: The Netherlands, the United Kingdom and Ireland
In the Netherlands, a national cycle plan was launched in 1995. Essentially, it allowed employees to buy a bike with their gross salary, meaning that they were paying just over half of its value. This measure contributed considerably to the growth of cycling, which currently accounts for 27% of everyday journeys in the country. In 2015, this original and effective initiative ended – or rather it was absorbed into a wider range of tax exemption possibilities. The 1995 plan also included the possibility of paying a tax-exempt kilometric allowance for travel by bike. This is currently 19 euro cents, but drivers get the same allowance. The Dutch government is currently targeting businesses with communications that encourage them to use this allowance, leading to the publication of numerous articles stating that employers in this country “pay employees to cycle to work”. In reality, the initiative is neither new, nor different from the kilometric allowance.
The system of purchasing a bike via one’s employer is also found in the British Isles. In the United Kingdom, the Cycle to Work scheme, introduced in 1999, allows employees to save 25 to 39% when they buy a bike via their employer. The cost is deducted from their gross salary over a year. Ireland has a similar scheme.
The impossible equation: Society versus Environment
There are variants of these approaches elsewhere in Europe, in different combinations. There are also initiatives on the part of local authorities (for example in Italy), which are covering the costs of a kilometric allowance for cycling. This has been the case in the French region of Hauts-de-France since 2016. However, much of the efficacy of pro-bike policies comes from infrastructure investments, which are a major reason for the success of this mode of transport in countries like the Netherlands.
In France, few of the emergency measures introduced in 2018-2019 concern transport between home and work: the kilometric scale, for those who choose the deduction of real costs, has been revised for low-powered vehicles (a compromise that reflects the dual demands of purchasing power and environmental responsibility). Moreover, local authority initiatives to assist with fuel prices for long journeys between home and work benefit from tax exemptions. However, only the Hauts-de-France region is concerned at this point, and in 2018 this scheme befitted just 14,000 drivers, by €20 per month.
France’s new bill to re-orient transport
Consequently, much hope was placed in France’s “Mobility Orientation” bill. After its to-and-fro between the National Assembly and the Senate, a failure at the joint committee stage and a rejection of the text by the Senate in early November, the bill was adopted by the National Assembly on 19 November.
The bill contains the following measures concerning employers:
- With an obligation to negotiate, companies that have not made a collective agreement on the subject and that have at least 50 employees on the same site must put in place an “employer transport plan”. These plans must include measures regarding employees’ travel between their homes and workplaces, such as: reducing the costs of travel to and from work for employees, incentives to use environmentally friendly transport, and coverage of costs for fuel, electric vehicles, rechargeable hybrids or hydrogen-powered vehicles, bikes and electric bikes, car-sharing, etc.
- A “sustainable transport” package will be created, which will allow the employer to cover the costs of employees who choose eco-friendly transport, bikes, car-sharing, public transport and other shared transport services.
- Coverage of transport costs will be extended to new groups, henceforth concerning employees whose residence or place of work is located in a community with no public transport or employer transport service, or is not situated in a zone covered by a “mandatory transport plan”. This coverage will also be extended to employees whose working conditions (hours of work) mean they need to use a personal vehicle rather than public transport.
In addition to these measures, the “cycle plan” will be promoted, with a multi-year budget of 350 million euros and a focus on improving cycling infrastructures, safety for cyclists, fighting theft and the development of a cycling culture. One of the ambitions of this plan is to increase the modal share of bikes from 3% to 9% in five years.
The content of the expected decrees will of course be decisive when it comes to ensuring the impact of these measures, but the “Mobility Orientation” bill extends what is already in place, without offering a revolutionary solution to the issue of eco-friendly transport between homes and workplaces.
The question of transport looks very different, depending on whether one lives in a city, a suburb, or the countryside. Legislators, but also company and public sector HR departments, are at the heart of a highly complex issue, which combines the need to protect the planet, questions of inequality, economic stakes, and spatial planning.