Legal Issues – Working from home pay

The working landscape has dramatically shifted since the beginning of the COVID 19 pandemic. While some companies are comfortable with the working from home set up, others are anxious to return to the office. A topic that is proving quite controversial is the issue of pay. Some have suggested that those who will be working from home permanently should have their pay cut.

An example of this in the US is that Google has launched a pay calculator which has resulted in some employees being left with a pay cut. Google’s response to this is to say that pay has always been based on location and the expense of living.

In the UK a cabinet minister echoed the same sentiment and suggested that civil servants who do not want to return to the office should have their salary decreased to account for the saving they are making in commuting costs.

But how easy is it to do this in practice? Any unilateral change of pay is not lawful and could lead to breach of contract and unlawful deductions of wages claims. In the UK, in order to change the terms of an employment contract there needs to be agreement with the employee.

If the employees do not agree there are still options available. For example, dismissal and re-engaging the employee on the new terms. This is still legally a risky approach as a tribunal will need to see that there is a genuine business reason for enforcing the change. If a business is saving money due to a reduced need in office space it may be hard to justify a pay decrease for home workers. However, this is obviously very fact specific. Additionally, if this change could lead to 20 or more people being potentially dismissed a period of consultation must be undertaken.

Furthermore, if it is found that it is mainly women or those with disabilities that are working from home for a decreased salary there is the potential for a discrimination claim.

In conclusion, changing terms and conditions of employees is a complicated area that needs to be handled carefully. For those employers who are anticipating a return to the office or would like more information on how to handle working patterns going forward Navigator is running a session on 21 September 2021 called Home, Office, Hybrid : flexible working requests and assessing risks of office working.

If you have any questions on any of the issues mentioned in the above article, please contact Natalia Milne.

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