When faced with an employment law issue, many employers turn to Google for guidance. Now, instead of searching for answers, employers are wondering whether to follow the tech giant’s example.
Google announced last month that it was planning to cut remote workers’ salaries by a quarter.
They’re not alone in this attitude, with a number of businesses—internationally—planning similar cuts.
Remote worker wages
Why cut wages?
The argument goes that people working from home are not paying commuter costs. As a result, they have a “de facto pay rise” if they don’t have their pay cut.
By this logic, the pay-cut would reduce pay to pre-homeworking levels. This tracks with Google’s approach too. Those with the longest commutes will receive the highest pay-cuts.
The justification for a pay cut is that not doing so could be seen as discriminatory. The argument against a pay cut is that it could be—you guessed it—discriminatory.
Pay cuts & discrimination
Following the announcement, news outlets commented on the potential for discrimination. The “de facto pay rise” argument came from an unnamed cabinet minister. They suggested that UK government civil servants who don’t return to the office should receive a pay cut.
This argument has its flaws, of course. Firstly, the individual working from home may be saving money on commuting costs, but that doesn’t mean they are earning more. Plus, In the UK, the role itself is what determines pay—not the location of work. London is the exception to this rule, as rates are higher to recognise the higher costs of living in the city.
Another argument is that those working remotely may be from a protected group, such as working mothers. If this is the case, subjecting them to a pay cut could be seen as sex discrimination.
However, as with most discrimination cases, each one would be fact specific. One workplace may find that all working mothers opt for a flexible working arrangement. Another may have a variety of people working flexibly. The potential for discrimination will always exist but can be avoided with fair practices and open communication.
Should I be cutting pay?
Whether or not you cut workers’ pay is up to you. We would advise caution if doing so, however.
UK employment law tells us that you cannot alter a key part of a contract without the consent of the employee. That means you must obtain the individual’s agreement before making the change. If they refuse to agree, you could terminate the contract and renegotiate the conditions of employment. This is also an incredibly risky move and is likely to result in significant pushback, including tribunal claims.
Failing to obtain employee consent could result in unlawful deduction of wages.
There is another issue that this could cause: widening the gender pay gap. If, as stated previously, the majority of remote workers are women, then a pay cut is likely to widen the gap in your organisation.
You must also consider staff morale. Polls and opinion pieces have confirmed what will seem obvious to most: a pay-cut demoralises staff. It may harm productivity and employee retention to reduce wages.
For all of these reasons, we’d recommend seeking independent advice before pursuing any kind of pay cut…
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