A survey by CIPHR suggests many employers have already reduced or stopped location-based allowances, mostly temporarily, and are considering doing so permanently for those who choose to work exclusively from home.
Over two-thirds (68%) of British businesses are contemplating pay cuts for staff who opt to work from home, despite many (53%) saying they’ve actually saved money by having more remote workers, according to a new survey.
The poll of 150 senior leaders by CIPHR, which provides HR solutions, showed 97% would continue to allow employees to work from home at least part of the week. However, while two-thirds (68%) of employers have given all or most of their staff the option to work remotely (29% and 39% respectively), the same number (68%) are thinking about reducing the pay of employees that wish to work from home permanently.
The poll shows 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 (39% compared to 29%).
Smaller organisations (those with 26 to 50 employees) are among the most likely to let all their staff have the option to work remotely (39%), compared to only a quarter (23%) of their larger counterparts with over 250 employees.
The survey shows 86% of employers have already suspended, reduced or removed location allowances, such as London weighting, because of home working. Most (49%) have only temporarily reduced them, and a quarter (23%) have temporarily stopped them. But 14% have made permanent changes.
For the 14% of organisations that haven’t made any adjustments to their location allowances yet, 29% are reportedly considering doing so.
Claire Williams, director of people and services at CIPHR, says: “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 focussed decisions will have to be made to ensure long-term survival and success. Good communication is key, especially when explaining why certain decisions have been made to the detriment of the workforce.”
Another survey from CIPHR of more than 1,000 UK employees found that nearly three-quarters would agree to a reduction in pay in return for being able to work remotely on a permanent basis.
Meanwhile, analysis by hiring platform Applied of over 7.500 job adverts shows those with more masculine works, including ‘challenging’ and ‘driven’, resulted in 10 per cent fewer women applying.