Home truths about cutting pay for remote workers

Google employees in the US are reportedly facing salary cuts of up to 25 per cent if they continue working from home after the pandemic, with the level of reduction dependent on where they live. In practice, this will most heavily punish those with longer commutes who reside in lower-cost areas.

Other major tech players such as Twitter and Facebook have also announced plans to cut salaries of remote workers in some form, with Facebook chief executive Mark Zuckerberg issuing an ominous warning in May that there will be “serious consequences” for those who are not honest about their location.

Here in the UK, a survey earlier this month by HR software firm CIPHR found that more than two-thirds of 150 medium and large-sized employers are considering cutting the pay of remote workers. This even though 53% reported cost savings under the work-from-home model.

The UK Government has also been championing a return to the office in a bid to revive flagging city centres, with Chancellor Rishi Sunak extolling the virtues of communal working. And in a media report earlier this month, an unnamed UK cabinet minister suggested that civil servants who don’t return to the office should receive a pay cut on the basis that they no longer incur the cost of commuting.

That argument is disingenuous given that rail fares have increased by 44% since 2010, compared to the 18% increase in the median weekly wage between 2010 and 2020. Where was the commensurate campaign to increase salaries in line with the costs of commuting?

The majority of those who want to continue working remotely will have valid reasons for doing so, be it caring responsibilities, disabilities or other health concerns.

There is nothing that legally prohibits employers changing salaries based on working location, but there are still risks. A disabled employee with difficulties navigating the commute may opt for remote working, but if paid less than able-bodied colleagues in the office, they could have a discrimination claim.

Legal issues aside, creating divisions between remote and office workers will foster resentment, and could lead to an exodus of remote workers seeking better pay elsewhere. The immediate cost savings may well be outweighed by the future financial fallout.

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