Travel expenses constitute one of the most nebulous and contentious areas in business, spanning the fields of compensation, human resource management and overall operating expenses. It is also one of the most fluid areas defying the establishment of any long-term, or even medium-term, policy. The basic issues that influence policies related to travel expenses are the type of work, geography, transport situation, culture, competition and tax regulations.

The industry a company operates in and the types of work employees do is the first consideration in the establishment of a policy on travel expenses. A sales-oriented company employing a large number of sales representatives will skew its policy towards this line of work. On the other hand, an industrial business consisting mostly of factory workers will probably have a travel expenses policy with purely managers in mind.

The geography of the country in which a company is located has a major impact on its policies about travel expenses. A company operating in a contiguous land mass will have very different rules about travel expenses from a company in an archipelago where employees have to travel from one island to another to do their jobs. The state of public transportation in the country also plays an important part. In some cases, the unreliability of less expensive surface transport, for instance, may force a company to opt for more expensive air transport resulting in higher travel expenses.

A country’s culture may have an influence on a company’s policies about travel expenses. In a number of under-developed countries where vehicles command prohibitive prices, employees look at cars as a status symbol and a strong incentive for working with a company. Providing managers and sales representatives with company cars not only locks them in but contributes to the prestige and standing of the company with trade partners and consumers.

The competitive situation in a given country or market also becomes a consideration when arriving at policies on travel expenses. Where companies have to fight over a labor force with limited mobility, the policy on travel expenses becomes a major come-on and can affect a company’s ability to attract and retain the talent it needs.

As in most cases related to employee compensation and benefits, a policy on travel expenses must take into consideration the tax regulations of the country. Where income tax on compensation is relatively high and rules on employee benefits are relatively liberal, travel expenses as an unofficial form of compensation may be preferred by employees, thereby creating a quasi-policy on travel expenses with no relation to work.

In the final analysis, the only policy that seems to be applicable is that an employee must be fairly compensated for travel expenses needed to do his or her job.