Living away from home allowance: Overview, definition, and example
What is a living away from home allowance?
A Living Away from Home Allowance (LAFHA) is a financial benefit provided to employees who are required to work away from their usual place of residence. This allowance is typically offered by employers to cover the additional costs associated with living away from home, such as accommodation, meals, and other daily living expenses. LAFHAs are often used in situations where an employee is temporarily assigned to work in a location far from their home, such as in another city or country, for business purposes.
The allowance helps to mitigate the inconvenience and extra cost that employees incur when they need to relocate temporarily for their job. The specific terms of the LAFHA, including how much is provided and what it covers, can vary depending on the company, the employee’s role, and the location of the assignment.
Why is a living away from home allowance important?
A living away from home allowance is important because it supports employees who are temporarily relocated for work by helping to cover the increased costs of living away from home. It acts as a form of compensation for the personal and financial burden employees might face due to relocation.
For employers, offering a LAFHA can help attract talent to positions that require relocation and ensure that employees remain focused on their work without being overwhelmed by the financial strain of living in an unfamiliar location. It can also be used as a tool to support employee satisfaction and retention during temporary assignments or projects.
Understanding living away from home allowance through an example
Imagine an employee, Employee A, is based in New York but is asked to relocate to San Francisco for a six-month project. Because San Francisco is more expensive than New York, Employee A’s employer provides a Living Away from Home Allowance to help cover the difference in living expenses, such as higher rent and additional costs for meals and transportation. The allowance might cover:
- Accommodation: Subsidized rent for an apartment or hotel stay.
- Meals: Coverage for the higher cost of eating out or purchasing food in San Francisco.
- Daily expenses: Additional costs for transportation or other necessary services.
Let’s say Employee A receives $2,500 per month as a LAFHA, which helps offset the higher living costs of working in San Francisco compared to their usual home in New York.
Example of a living away from home allowance clause
Here’s how a living away from home allowance clause might appear in an employment contract:
“The Employee shall be entitled to a Living Away from Home Allowance (LAFHA) in the amount of $2,500 per month, to cover the costs of accommodation, meals, and other living expenses incurred due to the temporary assignment in [Location]. This allowance will be paid monthly for the duration of the assignment, and will be reviewed if the duration of the assignment extends beyond the initial agreed period.”
Conclusion
A Living Away from Home Allowance (LAFHA) is a valuable benefit for employees who are required to work away from their primary place of residence. It helps to offset the increased costs of living in a new location and allows employees to focus on their job assignments without the financial strain of relocation.
For businesses, offering a LAFHA can make temporary relocation more attractive to employees and encourage successful outcomes in projects or assignments that require travel or relocation. By understanding and implementing clear terms for LAFHAs, both employers and employees can ensure that this benefit is used effectively to support work-related relocations.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.