Location-based pay cuts come with ‘serious risk’

Google employees based in the same office before the pandemic could face differences to their pay if they choose to work from home permanently.

According to Reuters, it is part of an experiment taking place in the US across Silicon Valley, which can often spark trends other employers will also follow.

Both Facebook and Twitter have also cut pay for remote workers who move to less expensive areas, while companies including Reddit have shifted to a location-agnostic pay model.

However, with more employees seeking to continue remote work due to the better work/life balance and benefits it offers, one employment lawyer has shared that employers may face legal implications if they choose to cut staff pay if they wish to work from home permanently.

Joanne Frew, UK head of employment law at DWF, shared that putting in place “sweeping pay cuts” for those working from home isn’t without “serious risk”.

“If employers wish to implement pay cuts for homeworkers this would constitute a change to terms and conditions, one employees are unlikely to agree to,” she explained.

“Employers would need to go through a process to change terms and conditions and could expect to face serious challenges.”

Workers want flexibility

According to the Covid-19 and Working from Home Survey by Strathclyde Business School and the University of Manchester, 78% of respondents stated that they would prefer to work in the office for two days or less. Meanwhile, almost a third said that they would rather not spend any time in the office at all.

With this in mind, various organisations are allowing their employees to work remotely forever. These include social media giant Twitter and travel firm TUI, while online retailer Ocado has granted its staff to work remotely from almost anywhere in the world for one month a year.

As more businesses introduce better flexibility, if an employer chooses to cut pay on the basis of home working Frew added that “employees would argue that the fact they work from home reduces overheads and if productivity has not diminished a pay cut would seem arbitrary”.

Commenting on Google’s move to reduce pay, an anonymous employee stated that they would see their pay cut by 10%. They added: “It’s as high of a pay cut as I got for my most recent promotion. I didn’t do all that hard work to get promoted to then take a pay cut.”

In contrast, a spokesperson for Google said: “Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from.”