Why you should not pay remote workers less

Employees across the world are making it clear that they don’t want to return to the office full-time.

While some are keen to work fully remotely, the vast majority want to mix up their time between the office and remote locations; a solution that has become known as hybrid working.

Therefore, employers across the world are figuring out how to make hybrid work successful; this involves deciding if they will also allow their workers to work anywhere in the world.

Airbnb made waves recently when it announced it would allow workers to work from anywhere in their current home country full-time. Importantly, it would pay them the same no matter where they lived.

However, not all employers agree that they should pay employees the same whether they come into the office or not.

In fact, a study of 3,500 managers by GoodHire found that 77% would severely punish any employees who refused to come into the office – pay cuts were among the punishments, alongside a loss of benefits and termination.

Twitter, Google, and Facebook have talked about adjusting compensation for US employees that move away from its San Francisco headquarters, but now UK-based Stephenson Harwood has entered the debate.

The law firm shared that its future of work model is hybrid and it is offering staff the option to work from home permanently. However, those who work from home permanently will be paid 20% less for the privilege, according to the BBC. For context, this would reduce the £90,000 annual salary of a newly qualified lawyer to £72,000.

This move has sent shockwaves across the HR community and has caused a huge debate on social media.

In this context, UNLEASH decided to collect the view of HR experts about whether this is a good move, particularly in the context of the ‘Great Resignation’ where employees are voting with their feet and quitting for workplaces that allow them to work flexibly?

Say goodbye to presenteeism

An issue with Stephen Harwood (and other employers’) decision is it plays into the view that working from home means people are slacking, and individuals are most productive in the office.

But the pandemic has shown that workers are as productive (if not more so) from home.

Molly Johnson-Jones, co-founder and CEO of Flexa Careers tells UNLEASH. “Reducing people’s pay if they decide to work from home is ridiculous”.

“Evidence shows that non-office-based work is far more like to increase productivity. And if output across different working locations is the same, quite clearly salaries should also be the same for staff” no matter where they work,” adds Johnson-Jones.

It is time to focus on outputs and outcomes, rather than visibility in the office – otherwise known as presenteeism.

DuoMe co-founder Graham Joyce shared on LinkedIn: 

“If companies are concerned about productivity, then clearly outlining outputs, expectations and deadlines is more effective than forcing employees back [with the threat of pay cuts] so they can be under the watch of their employer”, notes Dare Worldwide’s founder and CEO Rita Trehan.

Tom Blake, executive coach and managing director at Blake:Connolly, agrees. “Salary is about the output, what you do and how you do it, not how far you are willing to travel to sit at a desk on a videocall with someone in another location”.

It seems that pay cuts for remote workers is more about “the preference of the business leader than actual work performance”, according to Culture Amp’s director of people science Ken Matos.

“If [those working remotely] are contributing to the same extent, why should their remuneration be reduced”.

Cutting the pay of remote workers is “an outdated approach to the modern workforces”, states StaffCircle CEO Mark Seemann.

“Placing value on ‘presenteeism’ can devalue the work of remote workers. Just because they’re working remotely doesn’t mean they don’t offer as much value to business growth”.

FindYourFlex founder and CEO Cheney Hamilton agrees. She wrote on LinkedIn:

Is this discriminatory?

Paying people less based on where they work will create two classes of employees, where those who work from home are valued less than those in the office.

This concept is called proximity bias, and it means that those working remotely are less likely to be considered for promotions and pay rises.

Internal mobility decisions should be based on quality of work, not whether someone is in the office or not. But it also opens the door to discrimination at work.

Orchard employment law CEO Jemma Fairclough-Haynes notes that “a two-tier salaried workforce could amount to indirect discrimination”. This is because “it is possible that many of those who opt for reduced pay in return for flexible working will be women” or those with a disability.

“Women, people with disabilities and others for whom commuting can represent a challenge will be the most likely to work from home. This effectively punishes them for finding working conditions in which they can deliver value with less personal stress”, adds Culture Amp’s Matos.

If these people are passed over for promotions simply because they (and their work) are less visible to their managers, “employers could find themselves at risk of discrimination claims”, continues Fairclough-Haynes.

As well as leading to discrimination legal battles, Peninsula UK’s HR advice and consultancy director Kate Palmer notes that this approach “could pose significant risk of unfair dismissal [or] constructive dismissal”.

WorkNest’s group legal director Donald MacKinnon adds that this move “could also raise equal pay issues if the same work is being carried out by a female home worker compared to a male office worker.”

A bad idea in the ‘Great Resignation’

Not only could this move “leave an employer vulnerable to potential claims”, it is also likely to have an “overall negative impact on employee engagement”, notes MacKinnon.

Is now – when the world is facing the most difficult hiring situation of the 21^st century known as the ‘Great Resignation’ – really the right time to rock the boat?

Dare Worldwide’s Trehan doesn’t think so. “Forcing employees back to the office with pay cuts isn’t only excluding, it could also hinder their changes of hiring exceptional talent…More convenient working conditions shouldn’t come at a cost to workers.”

She continues: “Those that force employers back into the office by reducing will feel the brunt of their actions when employees vote with their feet”.

“Any organization that seeks to disadvantage an employee because they want, or need to, work from home, and there is no good reason why they can’t, are offering their best talent up to their competitors on a plate,” states Benefex’s chief innovation officer Gethin Nadin.

Justin Kearney, Logicalis’ group senior vice-present of HR, adds: “By cutting pay and punishing those in favor of remote working, business may end up sacrificing their operations and long-term growth”.

This is because they will lose their top-quality talent to companies that encourage flexible and remote working. Remember, a lack of flexible working options is a major cause of the ‘Great Resignation’.

Witco’s UKI general manager Alper Yurder continues that a pay cut is not the way to “win the hearts and minds” of the workers; it is simply not the right way to get employees to return to the office at least part of the week.

If the office is core to a company’s culture – and they don’t want to become remote-first – “they need to think out-of-the-box and create new seasons for people to return to the office”.

Flexa Career’s Johnson-Jones concludes. “Companies how want to revive office attendance should look for alternative ways to incentivize teams to return – preferably wants which aren’t illegal and morally corrupt.

“Positive cultures and supportive environments will make far more inclined to make the commute than threatening to cut their pay ever will”.

Seeman agrees: “In my experience, the best way to achieve good performance and employee engagement is focusing on company culture”, rather than looking at working location.

Ultimately, you should consider whether cutting the pay of employees who want to work from home full time is the right move for your business.