Can businesses cut remote workers’ pay?

Employment lawyers say issue is a ‘minefield’ as Google becomes the latest firm to warn of possible wage decreases for staff who opt to work from home

Employment lawyers have warned against cutting the pay of remote workers as Silicon Valley's Google becomes the latest firm to announce that staff who choose to continue working from home could see their pay packets shrink.

While Facebook and Twitter are planning pay cuts for US employees who have moved to less expensive areas, Google is offering a ‘Work Location Tool’ calculator that allows staff to see the effects remote working would have on their wage, Reuters reported.

One anonymous source shared that commuting to the Seattle office from a nearby county would likely see their pay cut by about 10 per cent if they worked from home full time.

Google’s decision is the latest development in the discussion of returning to the office after the Daily Mail last weekend (8 August) shared that an unnamed Cabinet minister suggested UK government civil servants who do not return to the office should receive a pay cut. 

The minister reportedly told the Mail that people who work from home are not paying commuter costs so they have a “de facto pay rise” which they said is “unfair on those who are going into work.”

While a spokesman for No.10 said there were “no plans” to cut the pay of civil servants, insisting the return to Whitehall would be “gradual”, employment lawyers have already cautioned other firms who might be considering implementing such policies.

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Marcus Beaver, UKI country leader at Alight Solutions, warned that penalising remote working could create a “culture of distrust and resentment” among staff.

“For employers who want to stay in their workforce’s good books, ensuring that remote working capabilities are maintained in a fair and equal way will be key to future business success”, he said, adding that offering both in-office and out-of-office flexibility is the way forward.

Reducing pay may be appropriate if the job role has changed, said Joanne Frew, UK head of employment law at DWF. This could be either because part of the role cannot be carried out away from the office or the employee has opted to work from home.

But, employers taking this route would still need to go through the proper process of changing terms and conditions, and should “expect to face serious challenges” from employees, she warned.

Employees could, for example, argue remote working reduces company overheads, meaning if productivity has not diminished, a pay cut would be arbitrary.

Malcolm Gregory, an employment partner at Royds Withy King, added that, if companies wanted all staff to work from an office, they would face an increase in formal requests to work from home.

However, if firms went the other way and offered fully remote working and wished to reduce salaries, he said, they will need to gain consent which is not always a certainty. “Staff who are not expected to commute, particularly into central London, are effectively being asked to waive their London weighting”, he said.

“This is, however, an employment law minefield for businesses,” said Gregory.

Paul Seath, employment partner at Bates Wells, also explained that any differences between the pay, benefits or prospects of those working from home when compared to those working in the office could give rise to discriminaion issues.

“For example, it can be said more women will choose remote working, because it better suits their caring responsibilities”, he said. “As such, if remote workers are paid less, it is going to have a greater impact on women.”

Seath added that because of this, the reasons for differences in pay will be critical in discrimination cases but also could damage the motivation and engagement of the workforce.