Should homeworkers be paid less?

I got an email last week entitled Home workers should expect a pay cut. The first line stated: “Employees “Working from Home” in areas commanding a lower wage than their work location should expect a pay cut if they want to continue past the Covid crisis, bosses warn.”

This was based on Twitter saying that employees who moved out of San Francisco, where its HQ is, to work from less expensive neighbourhoods would take a pay cut in line with living costs in their new location. It came after the head of Twitter Jack Dorsey announced that its employees could work from home permanently in the future if they wanted to.

But should homeworkers – or indeed anyone – be paid less if they choose to live in a less expensive area?

London weighting was, of course, set up to account for the increased cost of living in and around the capital. It came into effect following the 1974 report of the Pay Board and was initially based on a flat rate for inner London and a flat rate for the other London boroughs. In the late 1980s this spread to the home counties and despite reduced resources the public sector eventually developed some form of London allowance. There’s also a good argument to adjust pay in line with commuting costs and some employers subsidise travel costs.

Should this be extended more generally to homeworkers who move to cheaper areas and don’t have to commute so much? What about those who do a hybrid of homeworking and office working, getting the best of both ways of working? How would you factor that in?

My immediate response to the email was that many people who work from home already tend to get paid less. This is often because they have chosen to work from home due to family reasons and have taken pay cuts to do so. Many of these people are women so any pay cut is likely to affect gender pay calculations if full-time homeworking is taken up mainly by one gender.

Another argument is about whether paying a person less implies they are valued less and creates a two-tier system. Moreover, having worked from home for many years, there are costs involved which many employers, at least up to now, have not recognised and which many employees have been reluctant to bring up, given they need homeworking to work. For instance, office equipment, technical support, heating, electricity, phone and internet expenses, etc. If you are self employed you can claim these costs, of course. But that doesn’t necessarily apply to homeworking employees.

Employers will be looking for savings in the economic crisis to come and, getting more people to work from home could save them a lot on office overheads and estate costs if they downsize, for instance. It is likely that many will look at ways to reduce wages too and homeworking could be one target, given that surveys seem to show that people are prepared to take a pay cut in return from greater flexibility. In the past that has been because homeworking opportunities have been scarce and for many parents or carers they are a lifeline.

But should this be normalised if flexible working is to become more embedded? If so, there needs to be a wider debate and consideration of all the, perhaps unintended, potential side effects.

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