Work from home? It may mean a pay cut

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More than two-thirds of businesses are thinking of cutting the pay of staff who work from home –  even though half of them admit they’ve actually saved money by having more remote workers.

A poll of 150 business owners, CEOs, and senior managers revealed that a massive 97 per cent were content to allow staff to continue working from home at least some of the time. However, that does come at a potential cost.

And while two-thirds have given all or most of their staff the option to work remotely, the same number are contemplating the pay cut for those who want to do so permanently.

People wishing to be fully remote are more likely to face a pay reduction than their hybrid working colleagues, with two-fifths of employers singling them out for cuts, according to the HR software provider CIPHR.

Smaller firms with 26 to 50 employees are among those most likely to give all their staff the remote option to work remotely.

When it comes to location allowances, such as London weighting, it’s even worse news for employees. According to the results, 86 per cent of employers have already suspended, reduced, or removed these payments during the pandemic because of home working.

Employers need to tread very carefully if they are going to look to remove location allowances or cut wages based on location

And for the few that haven’t made any adjustments, half are reportedly considering it.

This comes on the back of earlier research  that suggested nearly three-quarters of people have expressed a preference for working remotely in some capacity.

Claire Williams, director of people and services at CIPHR, said: “Employers need to tread very carefully if they are going to look to remove location allowances or cut wages based on location, as a result of the shift to more home working – not only because of the legal and ethical considerations and consequences but the long-term impact on employee loyalty and risk of increased turnover.

“If employers have very clear policies and contractual arrangements in relation to location allowances, then this will be easier to navigate. But that won’t necessarily make it more palatable for the employee who is receiving the news that their earnings are going to reduce through no fault of their own.

“That said, the impact of the pandemic on the economy and organisations across the globe means that some difficult and very commercially focused decisions will have to be made to ensure long-term survival and success.

“With survival in mind, it is to be expected that organisations will look to capitalise on the success of home working and release properties to make significant annual savings. However, this will also have consequences that should be considered.”

More on CIPHR’s survey here