My company automatically pays employees working in London a London weighting allowance of between £3,000 and £4,000. For all other employees working in other regions, there is a market premium of between £1,000 and £3,000, but this is only paid at the regional director’s discretion. Also, there seems to be no criteria for paying the market premium. Is this discriminatory?
In principle, there is nothing discriminatory or otherwise unlawful about paying differential salaries according to geography, and indeed many companies do it. Problems only really arise where the regional director exercises their discretion poorly.
If they have discretion as to whether to pay extra or not, they will need to exercise such discretion in a bona fide and rational way, otherwise they will risk undermining the trust and confidence of their staff. This could result in staff resigning and claiming constructive dismissal.
A reasonable way forward would be for you to propose that the geographic variations are reviewed/benchmarked by a benefits consultant, and that the criteria for payment are made clear. Transparency in matters of remuneration is generally in the interests of all parties.
Meriel Schindler, employment group principal, Withers
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