Remote working – what does it mean for pay and benefits?

One of the biggest impacts of the pandemic on businesses is the rise in home and remote working arrangements. Now, after two-plus years, employees working from home is no longer a temporary survival measure, it’s part of the so-called new normal (remember when everyone was talking about what the ‘New Normal’ would be?) Companies of all sizes are looking at the practical realities of homeworking being a regular feature of working life. Inevitably, this includes the issue of pay and compensation…

CIPD research

The recent CIPD report, “An update on flexible and hybrid working practices” – following a survey of 1000+ organisations – offers the latest snapshot of UK employer and employee attitudes on these issues. The headline figures are:

  • 77% of organisations use hybrid working arrangements.
  • 59% of respondents say business leaders trust homeworkers to be productive.
  • 34% have a formal policy in place.
  • 23% leave arrangements to be made informally between worker and manager.
  • 44% with hybrid working don’t have a set minimum number of days to be in the office.
  • 55% do impose a minimum level of face-to-face attendance.

While there’s plenty of room for interpretation, these figures suggest progress: namely, that home and hybrid working is gaining wide acceptance, and (leaving aside the social media antics of Lord Sugar) that there is an increasing level of trust afforded to homeworkers.

But what about pay?

As with any division or difference (in this case, that between hybrid/homeworkers and ‘pure’ office workers) there’s a debate around whether one group is treated better or worse than the other. Those still coming into the office have the cost of their commute, which can be considerable, and some are saying they should earn more than their non-commuting colleagues. This may take the form of a premium payment for commuters, or a reduction in pay for homeworkers.

Back to the CIPD’s report:

  • 68% of organisations have not reduced the pay or benefits of those working from home; nor do they plan to do so.
  • 10% have not only not reduced pay or benefits but have also contributed to the cost of working from home.
  • 4% have reduced pay or benefits for homeworkers. (One of the more drastic examples was cited in a HRGrapevine article: a London law firm offered the option of permanent homeworking in exchange for a 20% drop in pay; and suggested that homeworkers were unlikely to be considered for partnership roles in the future).
  • 13% of organisations are planning on a reduction of some kind.

Is it legal to cut homeworkers’ pay?

Arguably not. Certainly, cutting wages would require solid justification as a proportionate measure (perhaps by showing any cut is equivalent to the cost of commuting, but that’s likely to be different for each individual and change over time with their circumstances). Most companies will not want to be the first to test the approach at tribunal.

Then there is the potential indirect discrimination when you consider which people would be more likely to be affected. For example, people working from home with caring responsibilities are more likely to be women. People with disabilities may be overrepresented among homeworkers (for example, those for whom the commute is the biggest barrier to carrying out a role). In both scenarios, indirect discrimination is a possible consequence of applying a pay cut.

Ethical and practical factors to consider

Apart from the purely legal situation, differences in pay and conditions between people ostensibly fulfilling the same role are likely to have an impact on employee engagement (it’s easy to imagine in the above example of the law firm that homeworkers could be less motivated, knowing that their career options are limited compared to their office colleagues).

There’s also the potential creation of yet another pay gap scenario, this time between homeworkers and office workers doing the same work or role.

Then there’s the issue of recruitment – opening up the homeworking options results in a geographically wider talent pool to choose from… unless pay and conditions are less favourable, perhaps.

Finally, most would agree that the UK is in the middle of a cost of living crisis – not the best time to start dishing out pay cuts, real or effective.

It’s totally understandable that after the last couple of years, employers are having to look for ways to cut costs to survive. If the issue of hybrid or homeworking coupled with pay and conditions is on the table, it’s as well to leave the final word to the CIPD’s head of public policy, Ben Willmott:

“Hybrid working won’t suit everyone or be possible for many workers, so employers must ensure there is consistency and fairness in how they manage, reward and promote those who can work from home and those who attend the workplace every day.”


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