As Google looks to review the wages of its homeworking staff in the US, could we see the same happen with UK employers? Simon Whitehead looks at the issues.
As businesses continue to navigate the return to the office, many employers are reflecting on what the future holds for their operational models, with many looking to make hybrid working a permanent fixture.
Controversially, the uptick in remote working has caused some businesses to reflect on whether payrolls should be adjusted to match new working habits and the reduction in commuting costs shouldered by employees.
One MP recently stoked the debate by suggesting that civil servants that worked from home have had a de facto pay rise, and did not deserve the same pay, terms and conditions as those who physically came into work.
And in the latest development, Google has signaled that its US-based employees who opt to work from home permanently may be in line for a pay cut, prompting questions around what the future of pay looks like. It is also begs the question as to whether a similar move by a UK employer is imminent.
Possible and probable?
Historically, wages in the UK have not been determined by where an employee lives or where they work, but on their skills and the work they deliver. Other than London weighting, location has therefore rarely been part of the consideration around what pay levels are set for a role.
Critically though, if a business in the UK should wish to follow in Google’s footsteps and vary wages based on where their workforce is located, they would need to first gain the consent of any employee affected by the change.
If the staff member agrees to a pay cut, then the issue would ostensibly be solved. But this would undoubtedly present a bitter pill for any employee to swallow, particularly for those who have remained loyal to their employers throughout the pandemic.
If a business in the UK should wish to follow in Google’s footsteps and vary wages based on where their workforce is located, they would need to first gain the consent of any employee affected by the change.
And with job vacancies at record levels, and many industries struggling to recruit staff quickly enough to meet demand, it’s never been more critical for employers to show recognition for employees.
Added to this, it’s safe to assume that the majority of employees would turn down a wage cut if the nature of their role or output has not changed. This is especially true for businesses that have successfully adapted their operations to accommodate working from home throughout periods of lockdown and flourished as a result.
Faced with this scenario, employers would instead have to terminate existing contracts, and issue new ones in their place to affect pay variation. But if individual employees still refuse to sign on the dotted line, the only tool left at the employer’s disposal would be to terminate their employment altogether.
Furthermore, if an employer should wish to vary pay across the workforce, then collective consultation is likely to come into play.
Widespread ‘fire and rehire’ schemes will often lead to sizeable public backlash, as we saw earlier this year in the case of British Gas, when hundreds of engineers lost their jobs after refusing to sign up to tougher employment terms issued by the energy supplier.
What about equality?
Despite the myriad reputational issues already mentioned, a number of businesses are expected to consider the possibility of introducing a two-tier pay structure in future, which would see new recruits paid differently based on where they do the majority of their work.
But again, a further significant drawback to this would be how it would cut across any equality and diversity initiatives, and the negative impact it would have on equal pay objectives.
For example, if a cohort of homeworking and lower paid employees is predominantly made up of people with protective characteristics – such as women with child-caring responsibilities – then a model that encourages unequal pay would naturally open a Pandora’s box of discrimination claims.
Even if the basis of pay was clear to an employee when they accepted the role at a lower pay level than their colleagues, if an employer is found to be paying some employees less than others for equal work, there is every chance they could fall short of equal pay criteria.
A further significant drawback to this would be how it would cut across any equality and diversity initiatives, and the negative impact it would have on equal pay objectives.”
Falling foul of the Equality Act 2010 has serious and long-term consequences for brand reputation, not to mention the potential for costly payouts, which could in turn cancel out any short-term gains an employer may have made by adjusting pay.
With increased levels of homeworking, it’s also vital that employees factor equality into job evaluation in the future. Businesses must be careful not to favour those employees that are choosing to work from the office with preferential treatment, such as reviewing their pay more regularly or promoting them more readily.
There has also been wider discussion around whether London pay weighting will be withdrawn by some firms if their employees are no longer working in the City.
While this is less likely to give rise to discrimination cases, as the purpose of the weighting is to compensate for the higher costs of living in London, it could still involve the termination and reissuing of contracts.
Perhaps most interesting is how the balance of employer-employee negotiating positions will shift as new lines are drawn post-pandemic, given the shortage of quality candidates we are seeing across many sectors.
More broadly, we may see employees begin to push to charge employers for the costs of working from home in the future. This could form a quid pro quo situation, in that the employee accepts less pay, but the employer pays them for the use of their home and facilities as a remote desk. Again, this will come down to the negotiations between the parties.
Equally, if an employee’s permanent place of work is at home and they need to go into the office, then they would, in normal circumstances, be able to treat the commuting time as working time and get paid for this. In most cases, they would also be able to claim the expense of travelling to the office.
Overall, any short-term savings an employer could make by choosing to reduce pay would be outweighed by the potential risk of legal claims and reputational damage. While some UK firms may still choose this route, it’s more likely the focus will instead pivot to how benefits packages can be tailored to support hybrid working in the future.
Google has long been a trendsetter, but its latest ‘innovation’ seems too unpalatable to catch on here in the UK.