Can Your Employer Cut Your Pay For Working Remotely?
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Can Your Employer Cut Your Pay For Working Remotely?

By Hannah Shewan Stevens, Interim Editor 25 Aug 2021
Discrimination, Workplace
Credit: Chris Montgomery / Unsplash

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As the UK eases back into in-person work environments, some employers are considering pay cuts for employees who elect to work remotely. 

Several companies are reportedly considering pay cuts for remote workers, including Google who already determine their pay packets according to location, but there are concerns that it could be discriminatory. 

A wide array of workers, including parents and disabled people, rely on remote and flexible working to retain employment and remote pay cuts could devalue their work. If these cuts are applied using a catch-all approach, companies risk breaching Article 14 of the Human Rights Act, which protects people from discrimination.

A recent survey by HR software provider CIPHR found that 68% of UK employers are considering whether to cut the pay of staff that elect to continue remote working. This is in spite of the fact that over half of the 150 businesses surveyed also stated that remote working had saved the business money. 

“Some employees may be working from home due to childcare or caring for disabled dependents. Where there are factors like this and pay is unfairly reduced, this could give rise to a potential discrimination claim,” said Danielle Parsons, an employment partner with law firm Irwin Mitchell. “If there’s no suggestion in your contract that your salary depends on your work being done in a particular location then it may be difficult for your employer to argue that you should now be paid less for doing the same work from home, particularly if you can show that you have performed well or better than before and you have hit your targets during lockdown.”

A research paper by the Chartered Institute of Personnel and Development found that 71% of firms reported no loss of productivity during a year in lockdown – while a third actually saw an increase in productivity. While remote work has been beneficial for many employees and employers, others are firmly advocating for a return to an office environment

But while employers are arguing that using a location-agnostic pay model – to which companies like Reddit and Zillow have shifted – creates a fairer pay scale, other companies have switched entirely to remote work. 

“The discussion around the pay reduction for remote workers makes me wonder how certain employers think it’s fair to judge employees’ worth based on their location,” said Chad Teixeira, founder and CEO of Inspired To Inspire Network, who decided to put all work activities online permanently. “I understand large multinationals’ frustration and their need to get workers all back within the office environment, but this is borderline blackmail.”

Who wants to keep working remotely?

Whether some employers want to admit it or not, remote work is likely to become a mainstay in various industries. The pandemic has given people the power to take charge of their employment and some have no intention of giving that up, with 72% of people surveyed in Future Forum research saying they want a hybrid remote-office model moving forward, and only 12% saying they wanted a full-time return to in-person work. 

“The amount of people handing in their notice to companies implementing an office only policy shows us how much it’s going to be a non-negotiable for a lot of people,” said Rachael Mole, Founder and CEO of SIC, a company building an online space to level the playing field for disabled workers. “You’re doing the same job, the same hours and have the increased cost of working from home – bills, internet, office set-up – it all adds up. Businesses are also saving on the reduced office space they will need, and all of the bills and expenses that come from having someone come into work in person.”

How does remote work affect marginalised groups?

Although employers generally save money by having remote workers, some companies appear determined to forge ahead with pay reductions for them. However, other managers do not see the benefit, especially for already marginalised workers.

“Disabled people were always going to be affected by the pandemic in more ways than one, and sadly we have seen through the government report released recently that a greater proportion of disabled people than non-disabled people were made redundant in the past year,” continued Mole. “Creating a financial penalty by insisting disabled people return to the office or their pay will be cut only adds to the financial burden of disabled people. On average it costs around £583 a month more by purely being disabled – a factor that isn’t taken into account in salaries anyway.”

Any employee in the UK also has the right to request flexible working, where practical, as well as reasonable adjustments for anyone with a disability. Although remote work can be empowering for an array of people, it can be a fight to secure it. 

“If we don’t protect remote work, we risk those who are already excluded from large parts of the workforce being even more disadvantaged – people who are also carers for their loved ones, women who need to work from home et cetera,” said Natalia Komis, Business Mentor & Founder of Remote Mission. “It is also important to acknowledge that remote work is a rising trend, and the future of work and to realise the benefits it can bring – more equality and diversity, better work-life balance, less commutes and emissions and a rise in rural living.”

What is the legal framework for a pay cut for remote workers?

Hearing that employers are considering pay cuts for remote workers may be scary, but they do not have unopposed power to do so. 

Parsons explained: “Your employer can’t unilaterally impose a pay cut on you without first getting your agreement to it. If they do so, then this is likely to amount to an unlawful deduction from wages and a breach of contract.”

Even with these protections, there are still opportunities for employers to push a pay cut through. Parsons said: “If your employer insists on reducing your pay, and you don’t agree to this, then they may serve you with notice of termination and offer you a new contract with a lower rate of pay – this is called ‘firing and re-hiring’ and depending on the circumstances may amount to an unfair dismissal.”

Enforcing pay cuts for remote workers in the UK could mean some companies flouting the rights of swathes of their own employees. Only time will tell if remote work will be given equal value to work done in person.