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Can employers cut salaries of those that work from home?

Alan Price, CEO - BrightHR

An unnamed Cabinet minister has suggested that civil servants who refuse to return to the office should be paid less than those who are back at their desks, telling the Daily Mail “’People who have been working from home aren’t paying their commuting costs, so they have had a de facto pay rise, so that is unfair on those who are going into work. If people aren’t going into work, they don’t deserve the terms and conditions they get if they are going into work.’

Can employers cut workers’ salaries if they continue to work from home? Alan Price, CEO at BrightHR, explains:

It may seem logical to pay staff differently if their place of work changes, especially if there are no added concerns around commuting. However, the way this issue should be approached depends heavily on the work that will be undertaken by the employee and if they will be working full-time or part-time.

It is not advisable that employers pay staff less for working from home permanently, even on a hybrid basis, if their role will remain the same as when they were fully office-based – unless the employee agrees to it or their employment contract stipulates that such a thing can be done.

This is because reducing pay due to a change in where an employee’s work is being carried out may be classed as unlawful deduction from wages if the individual is:

  • Working the same number of hours
  • Receiving the same amount of workload, and
  • Held under the same obligations as when they were in the office.

Even if the employee agrees to receive a reduction in pay, employers might end up with an indirect sex discrimination claim if it can be shown that more women work from home than men, so employers should be careful. Further claims of constructive dismissal can be brought if an employer has reduced an employee’s pay with no justification for doing so and the employee is forced to resign.

It is important that employers check their employees’ contracts before making any changes. For example, if a person works in a London based office but lives outside of the city, can an employer reduce/remove London weighting? If the contract stipulates that the employer can change pay if the employee is living outside of London, then perhaps removing London weighting could be possible. Even then, employers should be careful. If staff normally based out of London are paid the same as those in London doing the same work, it wouldn’t be advisable for an employer to enforce a pay reduction.

This could lead to constructive dismissal claims and perhaps other claims too, depending on the procedure the employer uses and other factors, including whether this affects women more than men or vice versa. Other claims could include discrimination and/or breach of contract.

On a similar note, if employers give some contractual perks with a financial value to those working in the office which are then removed because of homeworking, they may need to think about offering some compensation for this.

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