Pay Cuts For Remote Employees: Is It Worth The Risk?

With figures released by the Office for National Statistics (ONS) showing a 10% average increase in the number of employees working remotely in 2020 compared to 2019, there’s no arguing the fact that the Covid-19 pandemic has had a significant effect on attitudes towards remote working. As a result of these evolving preferences, many employers are reconsidering their approach to office working and contemplating whether it should have an impact on salaries. Laura Kearsley, partner and solicitor specialising in employment law at Nelsons, discusses.  

According to recent headlines, global employers, such as Google, Twitter and Facebook, are looking to reduce the pay of workers who choose to work from home permanently.

Meanwhile, in England, an anonymous senior cabinet minister is reported to have said last year that civil servants who refuse to return to office work should have their wages reduced, as it isn’t fair that those who choose to work from home should receive the same salary as those who commute.

Can an employer legally reduce the wages of a remote working employee?

This will depend on the provisions in an employee’s contract of employment or relevant trade union agreement.

If an employer pays an enhanced rate that is specifically tied to working in a particular area or office, such as a “London weighting”, they may be able to withdraw this when an employee is no longer working in that area.

In other cases though, it is likely that any move to reduce pay would be a contractual variation and, therefore, the starting point for employers would be that they need to consult employees on this and seek their agreement to the proposed change, otherwise, they will risk breaching their employees’ contracts, which could lead to lost wages and/or constructive dismissal claims as a result.

Even if an employer can legally reduce an employees’ salary for remote working, exercising caution is always advised as it may well be detrimental to workforce culture and could affect staff turnover. It could also create a two-tiered workforce, meaning that home working staff members may well feel less valued than those working in the office, which is likely to negatively affect staff morale and culture.

For staff members who feel forced to return to office working to avoid having their salaries cut, there’s a high likelihood that they could feel like they are being bullied into returning and harbour resentment about no longer being able to take advantage of the benefits that working from home affords.

A workable solution?

Instead of having a fully in-office or working from home approach, employers could instead adopt a hybrid working model – a mixture of home and office working – as this has advantages for both parties.

The benefits of introducing a hybrid working arrangement include greater flexibility and a better work-life balance for employees. For employers, they can reduce their overheads and the size of their commercial premises, and are also likely to benefit from the improved mental well-being that hybrid working offers their employees.

In these circumstances, we would always recommend that any employer considering implementing hybrid working arrangements has a suitable policy in place to set expectations and ensure a smooth transition into the new way of working.

For more advice on managing and supporting your workforce, please visit: https://www.nelsonslaw.co.uk/managing-your-workforce/