Q&A: Can employers impose pay cuts for remote workers?
26 August 2021
Q: We are a medium sized employer and we have decided to offer our staff the opportunity to either work in the office full-time, a mix of time in the office and working from home (hybrid working), or working from home full-time. We are considering implementing pay cuts for those who do not return to the office full-time as they will be saving money on commuting by working from home which seems unfair to their colleagues who are in the office. Is this something we can do and what are the potential problems that might arise?
A: There is no simple answer to this question, and we would advise caution before seeking to impose pay cuts for your remote workers.
A pay cut could be justified if your remote workers are no longer able to carry out a part of their duties by not being in the office. This would mean that their role has changed and if this will have an adverse impact on your business then it is arguable that a pay cut is fair. However, if you were thinking of cutting pay, you would need to consult with your staff before making any significant changes to their terms of employment.
It is reasonable to expect that some employees will not agree to their pay being cut. Likely arguments against this are that remote working reduces your overheads and increases productivity. Many remote workers will say that they are working longer hours; either because they’re working through what was their commuting time or because they feel they have to prove their worth since you can’t keep an eye on them in the same way as when they were in the office. Another argument is that remote working leads to employees taking less time off sick as staff are more likely to carry on as normal if they don’t have to commute whilst suffering from minor illnesses or things like bone fractures. Your employees might feel that they are being penalised for working from home which is going to negatively impact on staff morale.
If you cannot agree pay cuts with your remote workers then you could impose them anyway, but such action could lead to resignations and open you up to claims for constructive dismissal (from those employees with two years’ service). Alternatively, you could dismiss all of your remote workers by giving them their contractual notice and then offering them fresh employment on revised terms, including the pay cut. This is a high risk strategy, often referred to as ‘fire and rehire’ – see our article about this, and those dismissed could bring claims of unfair dismissal, again subject to them having two years’ service.
There is also the potential for discrimination claims to be brought against you. For example, it is still generally the case that women take the lead when it comes to childcaring responsibilities and so it is probable that more women will chose to work remotely. A practice of paying remote workers less could lead to indirect sex discrimination claims by women who are placed at a particular disadvantage as a result. It is therefore very important for you to be able to justify your reasons for imposing pay cuts for remote workers.
In conclusion, whilst it is possible to impose pay cuts for remote workers, there are several matters as set out above for you to consider before attempting to do so. This is likely to be an unpopular action amongst your employees and may lead to claims being brought against you. Taking specialist legal advice in this sort of scenario can be very worthwhile and should reduce the risks for your business.
If you are an employer dealing with issues regarding changes to working arrangements, then we can help. Please call us on 01243 836840 for a no obligation chat, or email us at [email protected].