How Should We Adjust Employee Travel Rates with Rising Fuel Costs in Software Development?

Good morning everyone, I need to fix the local conveyance rate for two and four-wheeler vehicles. Now that the petrol price has gone up, our marketing division members are insisting that we revise the rates, which were 2.50 and 5 rupees respectively. Our team consists of only 30 members, so could anyone please help me fix the price according to market standards in comparison to small-scale businesses? We are in the software development field.

It is true that the petrol rate has already been hiked, so you must increase the rate up to Rs. 5/- to Rs. 7/-. However, you must discuss this matter with your seniors as well.

Regards,
Meenu

Thank you for your reply. I believe 2.50/km for two-wheelers is quite low. Is there any regulation to standardize the rate? Could we set rates at 3.5/km for two-wheelers and 5.5/km for four-wheelers?

Regards,
SM

Dear SM, Be practical. While fixing, please consider the value of petrol, maintenance of the vehicle (for a four-wheeler, the cost of the driver), and the wear and tear of tires. For a two-wheeler, our company pays Rs. 3 and Rs. 3.50 when the cost was Rs. 52/- per liter, and for a four-wheeler, it is Rs. 6.50/- per liter. Since the prices have gone up again (Rs. 62/- per liter), it would be fair if you fix it at Rs. 4/- per liter for the two-wheeler and Rs. 7.50 for the four-wheeler.

Regards, Hari

Thank you for your reply and attachment. But Rs. 4/km, don't you feel it's a high price? I do agree that we need to take into consideration the hike, but if we fix the high price, then market people will take advantage too much. I am not against the employee; we need to balance both sides - Management and Employee. If I am wrong, please correct me.

Regards,
SM

The best way is to fix the rate at Rs. 7 per kilometer for four-wheelers and Rs. 4 per kilometer for two-wheelers. If an employee uses public transport, then he/she must obtain approval from his/her senior regarding the amount claimed for conveyance on plain paper.

Thank you.
Regards.

Setting Local Conveyance Rates for Vehicles

Nowadays, a motorcycle typically provides an average of 45 km to 55 km per liter of petrol. Considering the maintenance and wear and tear of a motorcycle, you should generally set the per km rate at Rs. 2.50 for a two-wheeler and around Rs. 7.50 per km for a four-wheeler.

Regards,
Ajay Gupta

You may like to consider fixing a certain quantity of fuel for the employees, depending upon the extent of their travel in terms of liters of petrol/diesel each month, and reimbursing the same against the production of bills in support of claims for conveyance. If you do this, you will not have to change your local conveyance rules every time there is a change in the price of fuel.

Best Wishes,
Vasant Nair

In our organization, we increase petrol prices only when there is an increase in petrol price on two occasions. Accordingly, please find attached a circular that I sent to all employees and branches. This is our standard procedure. I arrived at this decision by calculating the increase from the previous price, which came to 17.25%. Therefore, the increase has been implemented accordingly.

Regarding your query, I am unaware of the last petrol price increase in your organization. You can apply the same methodology and calculate it based on the increase from the old price to the current price.

As for the issue of cars, we provide a set amount of petrol every month based on the employees' grade or fieldwork. Therefore, the price increase will not impact these employees.

Regards,
Balaji

If you consider the current running cost for a four-wheeler, including maintenance (servicing, wear, and tear), you will find Rs. 4/- per km viable. However, you can judge the costing by discussing with your colleagues who use four-wheelers. The purpose of providing the attachment was to give you an idea for drafting policy, as rates can vary from company to company. If we hire a commercial four-wheeler, the minimum charges are Rs. 7 to Rs. 8/- per km. From that perspective, Rs. 4/- per km is on the justifiable side.

Regards,
Harish

I agree with Harish. Please let me know if it is viable to fix a monthly lump sum for fuel expenses. How do you all typically monitor this policy?

Looking forward to hearing from you.

Best regards,

Dear SM, This is in response to the email addressed to Mr. Harish. Please conduct a sample study in your city. Please put yourself in the shoes of an employee attending an official job, traveling 10 KM by auto. The auto charges will exceed what you are entitled to if the compensation you provide is less than Rs. 3.50 or 4. If you travel by your own two-wheeler to save money, you might be sacrificing your energy and comfort. I hope most companies implement employee-friendly policies. This is just a suggestion based on my experience.

Regards

I want to start petrol expenses and per day allowances to be paid to the employees for petrol. How should I put that into practice, and should I pay the employees according to the average that the vehicle gives or a standard rate? The company has a few employees who go for marketing purposes for the whole day, as well as a few employees who go just for a few hours, maybe one or two hours a day.

Please help me as I am new to the company and a fresher.

Thanks.

Dear All, thank you for sharing your experience regarding fixing petrol claims for two-wheelers and four-wheelers. However, I need proper supporting justification. If we are to fix a conveyance allowance for any vehicle, we should calculate the following particulars:

- Average vehicle mileage
- Fuel cost per liter
- Maintenance cost per km

For example: Two-wheeler - Average mileage 50 km per liter. Fuel cost as of date: Rs. 84 (84 / 50 = Rs. 1.68). Maintenance cost for a new vehicle - first 3 months service charges - Labor: Rs. 250, Replacement of Oil: Rs. 600, Service expense: Rs. 250, Other expenses: Rs. 250. Overall maintenance cost for 3 months = Rs. 1500 (1500 / 4500 = 0.35). Replacement of Tire cost = Rs. 1100 x 2 = Rs. 2200 for 35000 km (2200 / 30000 = Rs. 0.08). Total cost per km = Rs. 1.68 + 0.35 + 0.08 = Rs. 2.11.

I hope this can justify ourselves. In case anything is missing, please advise me.

Thanks & Regards,
P.K. Jagadeesan

Can anyone update me on the formula for calculating the Fuel Price? I want to fix the petrol/diesel reimbursement price in my company. Please suggest how to decide the rate for reimbursement per km.