Can You Pay Remote Workers Less?

A debate is raging in the media and amongst employment lawyers and HR specialists about pay and whether hybrid working can or should have a bearing on salaries: in particular, what are the rights and wrongs of looking to cut the pay of workers who choose to base themselves from home rather than returning to the office.

Do you remember “London Weighting”, the applied concept where employees are paid more in London to compensate for the fact that it costs more to live in the capital? Now we are talking about a reverse effect, where staff who choose (perhaps might even be asked) to work from home, which is likely to be away from the city or proximity to the workplace, are being considered for a pay downgrade on the basis that where they have chosen to live is cheaper than where the offices are situated (eg London) and/or they no longer have to pay travel expenses (which can run into many £000’s annually) to come into the office.

Some big names – including Google, Facebook and Twitter – are planning to cut the wages of US staff who choose to continue working from home after the ending of lockdown brought on by the pandemic. There have even been reports (eg Tech Times – June 2021) of a ‘Work Location Tool’ which Google has apparently developed so that staff can work out how much of a deduction to salary they might suffer/expect, depending on where they live (i.e. how far out of region they are). Effectively, this tool would allow them to calculate their expected salary by state.

The impact of such measures and similar on recruitment and the salary levels one might expect is still unknown, but at this stage the main question is whether it is not only ethically fair and reasonable but also whether it is lawful.

On the one hand, it has been argued that it is unfair for office-based staff to be paid the same amount as home-based staff, when their costs may be considerably higher due to commuting, food, child and pet care and other expenses. But does this miss the point?

Whereas pay reductions may be justified if the nature of the job has changed or there are different duties involved, particularly if some previous aspects of the role can no longer be carried out effectively from a remote location, there are many factors to consider. Not least of these is whether the employer has reduced the size of its offices meaning staff do not have the option to physically come into work every day. In this case, the decision has been made by the employer and not the employee. Furthermore, it could be argued that the employer has already benefitted financially from a portion of the workforce being based remotely, in as much as it no longer carries the same fixed costs as pre-pandemic.

Fairness and equality will be the benchmark and some remote workers may be happy to accept a pay cut in exchange for greater flexibility and work life balance. However, a simple pay cut, certainly where there is not at least a semblance of consultation, could leave employers in trouble.

Whatever the individual situation, a contractual change will be required and this must follow due process. Additionally, if the role has remained the same and productivity of the employee is unchanged, a pay reduction will be difficult to justify.

Notwithstanding the potential for breach of contract, there is, of course, the issue of potential discrimination to consider. If, for example, more women opt to work from home than men, pay cuts could adversely affect female staff. A similar issue might arise with those with a disability or even for older workers. A hornet’s nest has been disturbed in some businesses already: It remains to be seen who will be stung.

For expert advice and individualised guidance on employment law issues affecting you or your business contact Richard Port at rport@boardside.co.uk or call 0330 0949338