What Is a Stipend?
If you've been offered stipend pay, it's important to know what a stipend is and what benefits it might provide. Receiving a stipend can, for example, assist with your living costs or education fees. Receiving a stipend might also allow you to focus more completely on the job at hand. In this article, we explore the definition of a stipend, who is eligible to receive stipend pay, how stipends work and the key differences between stipends and salaries.
What is a stipend?
A stipend is a fixed amount of money that is provided to cover your living costs and the basic expenses associated with study or work. It should not be confused with a salary, as a stipend is received in specific circumstances. Usually, stipends are awarded to employees. The amount of stipend given is usually less than a salary. Regardless, the recipient of a stipend can benefit greatly due to their reduced expenses, which allow their salary to be saved or spent in other ways.
Although a stipend can form part of an attractive benefits package, it's considered distinct from the employee's usual salary. For example, an employee might receive a £200 stipend to help them manage the costs of remote working. They could also be given a travel stipend to cover the cost of transport used for work-related matters.
Who can receive a stipend?
In most cases, stipends are paid to the following groups:
Types of stipend
Typically paid to employees, interns, assistants or volunteers, stipends can vary greatly, depending on their intended use.
Stipends paid by employers to employees can have many intended purposes. These might include:
Home office expenses
Commuting and other transport expenses
Health insurance and other wellness programs
Housing expenses, utility bills or relocation necessitated by employment
Mobile phone bills for sales department employees or those who need to regularly travel for work-related reasons
Daily allowance for costs related to business trips, such as meals and lodging
Research stipends to cover relevant expenses
Educational stipends to facilitate the undertaking of classes relevant to necessary job skills
Remote work stipend
Due to an increasing number of people working remotely from home, many companies began offering remote work stipends. These stipends assist employees in setting up a home office, paying the extra utility bills associated with working from home and can help with other additional costs such as food delivery. A remote work stipend ensures that an employee can continue performing their duties as effectively from home as they could in their usual workplace.
Educational stipends are a form of financial support given to students to enable them to attend an academic institution that they might otherwise be unable to afford. These stipends might cover the cost of required books, accommodation and food expenses. Some teaching assistants might also be offered stipends while working in educational institutions.
Research stipends are offered by many universities to postgraduates while they work at the institution as research assistants or fellows. These payments often cover living expenses so that the individual is not required to undertake other work for financial support during their research. The stipend allows for greater focus on that research and enables them to produce better results.
In instances where organisations provide training to their employees, they might also offer stipends. This is a way to encourage trainees to improve their skill sets and become greater assets to the workforce as a result. This training will usually be closely related to an employee's job requirements.
Governmental agencies, businesses and sometimes non-profit organisations that offer internships might also provide stipends to their interns. This typically applies to unpaid internships, where interns might otherwise be unable to pay their cost of living. These stipends allow interns to focus on their work without having to seek additional employment during the internship period.
Health insurance as a stipend
A non-profit organisation might provide its volunteers with health insurance or a stipend to assist with paying medical fees. This is beneficial to both the employer and employee, as it enables the employee to receive any necessary treatment and return to work when able.
Religious stipends are provided to the clergy for specific purposes. For example, members of a church might offer a stipend to their priest for performing a service that is not part of their usual duties. Stipends can also be given by the church to volunteers who undertake work in the name of the church. This might include charitable causes in the local community or overseas, as well as missionary work.
Differences between salaries and stipends
As previously mentioned, a stipend is different from a salary. They are not interchangeable and should not be confused with each other. Some key differences include:
When a stipend is provided to interns and trainees, it's not subjected to minimum wage requirements. As a result, a stipend can be considerably smaller than an equivalent salary. This stipend addresses essential living costs but is not expected to provide the recipient with any meaningful disposable income.
Nature of responsibilities
If you're a salaried employee, you will be contractually required to fulfil certain duties. You will thus be expected to possess relevant skills, as well as the necessary knowledge to fulfil those duties. However, the recipient of a stipend is often in a position where they are looking to gain those skills and relevant experience. A stipend allows an individual to refine their workplace abilities without being paid a full salary while lessening the financial strain that is otherwise associated with an unpaid internship.
Aspect of negotiation
As a full-time salaried employee, it's possible to renegotiate salary based on performance or shifting job requirements. However, this is not the case with stipends. Stipends are fixed amounts that remain constant throughout their duration.
How does a stipend work?
Stipends are usually offered in a fixed amount. In some cases, companies allow employees to negotiate their stipend amount, but there is generally a set amount to be distributed to the stipend recipients.
Frequency of stipends
Most employers have a set schedule for the payment of stipends. They can be paid on a weekly, monthly or sometimes quarterly basis. The schedule of stipend payments must be discussed before agreeing to an arrangement.
Benefits of stipends for employees
Stipends provide numerous benefits to employees. These include:
Boosting employee satisfaction
Stipends generally improve employee morale. When paid alongside a salary, a stipend can result in a much happier workforce. A stipend can cover essential costs, allowing an employee to enjoy more of their salary for personal use.
Life as an employee is not always straightforward, and working from home isn't necessarily easier than working at a place of business. With more people working from home than ever before, a stipend assists with costs that an employee should not be forced to pay out of their salary. As previously mentioned, this might include buying the necessary equipment to create a home office.
Provide employee flexibility
In cases where a general stipend fund is offered by employers, it grants additional freedom and flexibility to employees. In turn, this reduces the administrative burden on managers and the HR team of a company. Reducing an employee's financial burden is beneficial to the workforce as a whole.
How much is a stipend?
It's difficult to say how much money a stipend might include. The amount depends on several variables, such as:
The company's overall budget
Nature of employment
Stipends are usually offered in a fixed amount and are not based on individual experience. They are generally not intended as a performance incentive.
Can you negotiate your stipend amount?
As mentioned previously, stipends are usually fixed, predetermined amounts of payment defined by employers. However, this does not mean that they can never be negotiated. You can attempt to negotiate a better stipend and, in some cases, negotiation is a necessity. Just as you might negotiate your salary with a prospective employer until you're both satisfied, a stipend amount must be agreeable for both parties.
For example, if you've been offered a stipend to cover living costs, but those costs are far greater than the stipend amount, you should discuss this with the human resources team. You might be able to negotiate an increased stipend amount, which allows your employer to fulfil the required living costs of their workforce. Instead of simply accepting hardship in silence, it's important that you address such issues with the appropriate people at your workplace. Again, it's beneficial to your employer to have a workforce that can operate without discontent and financial stress, so it's always worth discussing the matter.
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