Homeworking has become something of a buzzword since the Government issued its ‘work from home’ mandate in April 2020.  It is estimated that almost half of workers in the UK worked from home in 2020 owing to Coronavirus.  Now that we’re seeing the easing of restrictions and the green light for workers to return to the office, many are suggesting that they are unlikely, or unwilling, to do so.  Whilst homeworking may still not be the norm, it is clear that it will be increasingly common going forward.

As a result, many employers are wondering if they can pay homeworkers less than their office based counterparts.  There are many reasons for this:

1. Homeworkers do not have the time or costs associated with a commute;

2. Many jobs attract a location-based weighting (particularly London) which is no longer relevant; and

3. Many jobs are in places where the cost of living is high, but if the employee is entirely home-based they may not need to live in close proximity to their office, and may be living in an area where the cost of living is much lower.

These are all valid points and in terms of new roles where the employee is permanently home-based, businesses may be able to offer lower salaries.  This may be because homeworking is a benefit, in exchange for which the employee will be willing to accept a lower salary.  It may be because you can find employees ‘out of area’ if your business is based on a high-cost-of-living location.

However, many employers are wondering if they reduce pay for existing employees who were previously office-based and are now home-based.  Reducing pay is always difficult as it is a change to terms and conditions which is rarely justifiable – and almost never agreed by the employee.  For those employers considering this, I would urge them to consider:

• Why you are considering reducing pay.  Is it because the business is struggling financially?  If so, cost cutting exercises or redundancies are easier to justify.  Is it because you consider that the employee is less productive at home?  If so, you need to consider whether the job can continue to be solely homebased or whether there is a conduct issue. 

• Many businesses who are introducing permanent homeworking are doing so because they have reduced or eliminated office space.  In those circumstances where there is a significant saving to the business, it would not seem fair to also reduce employees’ pay – especially if it was your decision and not theirs to continue with homeworking.

• Whilst your motivation might be that the employee is saving costs by not commuting, do bear in mind the additional costs they will be incurring on their utility bills, which for some may match or outstrip commuting costs.

There are two potential scenarios where reducing pay for existing employees may be justified: either as an alternative to redundancy or if homeworking has substantially changed the employee’s role, perhaps because many of their responsibilities cannot be carried out from home and are now being carried out by their office-based colleagues. In either event, there must be a consultation procedure which is complex and easy to get wrong, and therefore specialist, professional advice is always recommended.

Should you have any queries about the issues raised in this article, or on any employment related matter, please contact our expert Arvin Sandhu by email or on 01494 893 542.