CIPHR: 68% of employers considering cutting pay of remote workers
Is this legal?
Why You Should Care
Tech giants are considering adjusting pay based on the location where people work.
But they are not alone. Research by CIPHR found many British companies are planning to cut the pay of those who work from home.
Is this a good idea in the midst of the 'Great Resignation'?
Last week, it was reported that Google is considering cutting the pay of employees who choose to work from home permanently. This is particularly the case if they choose to move and live in cheaper areas too far away to commute to the office.
This comes on the back of Facebook and Twitter hinting that the future of work at the social media giants will also see location-based pay.
Unfortunately, it seems that the US tech giants are not alone in considering pay cuts for staff who want to work from home full time.
Research by HR software provider CIPHR has found that 68% of British companies are considering pay cuts for staff who choose to work from home permanently. This is despite 53% of the 150 businesses surveyed acknowledging that remote working had saved them money over the past year.
In addition, CIPHR’s study found that two fifths will single out fully remote employees for pay cuts compared to their hybrid colleagues.
Further to this, 86% of employers have already decided to suspend, reduce or remote location allowances, like London premiums; with 14% deciding to make these permanent.
“Employers need to tread very carefully if they are going to look to remove location allowances or cut wages based on location, as a result of the shift to more home working,” noted CIPHR director of people and services Claire Williams.
“Not only because of the legal and ethical considerations and consequences but the long-term impact on employee loyalty and risk of increased turnover.”
Williams continued: “If employers have very clear policies and contractual arrangements in relation to location allowances, then this will be easier to navigate.
“But that won’t necessarily make it more palatable for the employee who is receiving the news that their earnings are going to reduce through no fault of their own.”
The survey also found that employers are concerned about the impact permanent working from home will have on their employees.
For instance, 57% noted that working from home could impact career development, while 77% think that it is important that younger employees work from an office or somewhere outside their homes.
Williams concluded: “Whilst many people have relished working from home, the results from recent CIPHR surveys, and other similar research, indicates that younger employees prefer an office or workplace environment.
“It can also hinder the pace of personal and career development – both potential drivers for increased turnover and barriers in attracting top talent.
“If the savings are just too significant to ignore, then organizations could consider alternatives to a permanent office, such as shared workspaces that can be hired on an ‘on demand’ basis or ‘office hoteling’ being the more common phrase.”
