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Pay cuts for remote workers

View profile for Josh Fresle
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With remote working expected to stick around for a long time within many businesses, what impact will this have on an employee's terms of employment?

In the US, Google is considering implementing pay cuts for employees who choose to work remotely. Google developed its own "Work Location Tool" to assess the reduction of pay an employee might face for working remotely from a different city. Some employees could face pay cuts of 5%, 10% or even 15% if they choose to work remotely from a different city to where their office is based. Google has said that employees who work remotely in the same city as their office is based will not receive pay cuts.

For those who opt to work remotely, they are left with taking a pay cut or relocating to the city in which their offices are located.

Other large companies such as Facebook and Microsoft have implemented a similar mechanism, offering to pay less to employees who live in less expensive areas.

In the UK

At this point in time Google will not be implementing these changes to its UK workforce.

In the UK, changes to an employee's terms of employment, including pay, can be only be made with their consent. An employer does not have the right to make alterations to an existing employee's contract of employment whenever they choose.

Employers could however offer new terms, such as a reduction in pay for working remotely, to new employees. Employers may also be able to "fire and rehire" existing employees if they do not consent to changes to their employment contract and there has been a recent flurry of "fire and rehire" cases highlighted in the media. "Fire and rehire" is when an employer terminates an employee's contract of employment and then rehires them under a different contract of employment, with their desired changes made.

Concerns

There are a number of concerns surrounding pay cuts for remote working. It could lead to a lack of diversity and equality within businesses and even increase the gender pay gap.

Although we are likely to continue to see changes on this front, business should keep in mind the needs of their workforce and work together to reach an outcome that benefits both parties. What works well for one employee may not work for another.

This is not legal advice; it is intended to provide information of general interest about current legal issues.

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