Remote work pay cuts on horizon despite businesses saving money

More than two-thirds of companies across the UK are considering pay cuts for staff who choose to work from home.

According to a survey by HR software provider CIPHR, 97% of organisations will allow their employees to continue working remotely at least some of the time.

Yet 68% of these employers were already contemplating introducing pay cuts to employees who want to work from home full time.

This is despite the fact more than half (53%) of businesses surveyed admitted to saving money as a result of remote working. 

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Claire Williams, director of people and services at CIPHR, said employers would need to tread carefully if they plan to cut wages based on location.

“Not only because of the legal and ethical considerations and consequences, but the long-term impact on employee loyalty and risk of increased turnover,” she said.

If an organisation wants to keep its physical premises, and is struggling to make it cost-effective with so many remote workers, Williams said organisations will have to work at creating the right environment for employees.

Speaking to HR magazine, Williams said: “While there is an apparent preference to home working, there are also benefits to working in the office with your colleagues, therefore employers could focus on incentivising the ‘best parts’ of office life and to remove any barriers.”

Helping with travel costs and increasing social events or activities could help incentivise more to come in too she said.

“Employers just need to think creatively about how to ensure employee’s opinions and preferences are heard, whilst balancing this with any genuine business needs,” said Williams.

The survey also highlighted that fully remote workers are more likely to face a reduction in pay compared to hybrid-working colleagues, with 39% of businesses eyeing them for pay cuts. 

In London, the situation for home workers is more difficult, with CIPHR revealing that 86% of employers have already suspended, reduced, or removed geographical premiums because of remote working. 

These findings may correlate with the results of a separate survey conducted by CIPHR, which saw 77% of employers agree that young people, in particular, benefit from working in an office.

CIPHR’s research is based on a poll of 150 business owners, CEOs and senior managers.