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Pay cuts for staff choosing to work from home – is this the right approach?

Latest survey reveals 68% of employers are considering pay cuts for staff choosing to work from home

A new survey by HR software provider CIPHR reveals that 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.

CIPHR polled 150 business owners, CEOs, and senior managers to find out more about employers’ attitudes towards staff working from home. All survey respondents work for organisations that pay location allowances and have some staff working from home due to the pandemic.

The majority – a significant 97% – say their employees will be allowed to continue working from home at least some of the time. However, that does come at a potential cost.

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.

Gemma Murphy, Director, explains, “Ultimately this is going to have a huge impact on morale in a business. This has huge implications in so many ways including:

  • The requirement to consult with all employees on a significant change to their terms and conditions of employment.
  • The risk of breach of trust and confidence in the employment relationship.
  • There may be some who would do this as they remove the cost of travel, on the flip slide the recruitment market is crazy and employers should be doing all they can to retain talent.”

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.

Employees will need to agree to pay cuts for working from home before any changes are made to any contractual payments, and there are other considerations to take into account outside of the money savings this could achieve. Making reductions in today’s candidate-led market could mean that businesses may struggle to attract the right talent for their business, and even more worryingly, may push top employees out. The disparity between a fully office-based workforce and a hybrid workforce is likely to lead to very different company cultures and operational challenges.

If you are looking to adopt a hybrid working model, and would like to discuss this in more detail, please contact a member of the ViewHR team today.