Employee Discount Policy Template

Offering employees a discount on company products or services is a great way to reward your team, build brand loyalty, and create a deeper connection between employees and the business. But like any benefit, it works best with clear guidelines.

A well-structured employee discount policy ensures everyone understands how the discount works, who qualifies, and what’s allowed — helping prevent confusion or misuse while keeping the perk enjoyable and equitable.

What the Employee Discount Policy Should Include

To be effective, your discount policy should cover:

• Purpose and scope: Why the policy exists and who it applies to.
• Eligibility: Which employees qualify (e.g., full-time, part-time, interns).
• Discount details: Percentage or amount, applicable products or services, and any exclusions.
• How to redeem: Step-by-step instructions for accessing the discount (e.g., employee portal, discount code).
• Rules and limitations: Frequency limits, resale restrictions, return rules, or misuse consequences.
• Friends and family use: If applicable, include whether the discount can be extended to others.
• Tax and payroll considerations: Whether the discount counts as taxable income (if applicable).
• Policy compliance and consequences: How violations are handled and who to contact with questions.

Purpose of the Employee Discount Policy

The purpose of this policy is to:

• Provide employees with a clear and accessible benefit for personal use.
• Promote engagement with [Company Name]’s products or services.
• Ensure the discount program is used fairly, legally, and in alignment with company values.
• Prevent abuse of the program by setting consistent guidelines across the organization.

Sample Employee Discount Policy

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Effective Date: [Insert Date]
Policy Owner: People Team / HR Department
Last Reviewed: [Insert Date]

1. Policy Overview

As part of our commitment to employee engagement and appreciation, [Company Name] offers employees a discount on select company products and services for personal use. This policy explains who is eligible for the discount, how to access it, and the rules that apply.

2. Eligibility

The employee discount is available to:

• Full-time and part-time employees actively employed by [Company Name]
• Interns, contractors, and temporary workers only if specifically approved by management
• Employees on approved leave of absence (excluding those on final notice or suspended)

You must be actively employed at the time of purchase to use the discount. Terminated employees are not eligible for post-employment use.

3. Discount Details

• Discount amount: [Insert amount, e.g., 25% off] all regular-priced merchandise
• Where it applies: [Insert applicable platforms — in-store, online, app, etc.]
• How often it can be used: Unlimited personal use, subject to the policy’s terms
• Product exclusions: [List categories or items, e.g., sale items, limited edition releases, third-party goods]

The discount cannot be combined with other promotions, coupons, or markdowns unless stated otherwise.

4. How to Redeem

To use your employee discount:

1. Log into your employee account on the [Company Name] website or app.
2. Use the code provided in your onboarding packet or internal HR platform.
3. For in-store purchases, show your employee badge or provide your employee ID number at checkout.

If you experience technical issues, contact [Insert support contact] for assistance.

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5. Friends and Family Use

Unless otherwise stated, the employee discount is for personal use only. Employees may not:

• Purchase items for resale or profit
• Share their discount code or login credentials with others
• Place orders for friends, family, or external clients using the employee discount

Violations of this policy may result in loss of discount privileges or disciplinary action.

Some companies may offer separate friends and family sales throughout the year. These will be communicated in advance and follow separate rules.

6. Returns and Exchanges

Items purchased using the employee discount follow the same return and exchange policy as regular purchases. However:

• Refunds will be issued based on the discounted purchase price
• Restocking fees may apply depending on the product category

7. Tax Implications

In most cases, employee discounts are not considered taxable income, provided the discount does not exceed IRS limits (currently 20% off retail price for services or gross profit for goods). However, if the discount exceeds these thresholds, the difference may be reported as taxable income.

Employees are responsible for understanding their own tax obligations and can consult HR for general guidance or speak with a tax advisor.

8. Abuse or Misuse

Any misuse of the employee discount, including unauthorized sharing, resale, or excessive purchasing for non-personal use, may result in:

• Immediate loss of discount privileges
• Disciplinary action, up to and including termination
• Repayment of any inappropriately discounted purchases

All discount usage may be monitored to ensure compliance.

9. Policy Administration

This policy is managed by the People Team and may be updated at any time. Employees will be notified of any material changes to eligibility, discount value, or program structure.

For questions about the employee discount policy or to report a concern, contact [Insert HR contact or employee support channel].

Frequently Asked Questions

1. Can I use the discount for a gift for someone else?
You may use the discount to purchase gifts, but you may not resell discounted items or routinely shop for others. Use discretion and keep purchases aligned with personal use.

2. Can I use my discount while on leave?
Yes, as long as you remain an active employee and are not on suspension or notice of termination.

3. What happens to the discount if I leave the company?
Your discount will be deactivated upon your last day of employment. Former employees are not eligible.

4. Can I combine the discount with other promotions?
In most cases, no. The employee discount cannot be used with other coupons or sale pricing unless explicitly stated.

5. Is the discount monitored?
Yes. The company reserves the right to monitor usage and investigate potential abuse.

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