Employees are accepting pay cuts to be able to work from home - but should they?

After months of remote work, many of us are less than thrilled at the prospect of returning to the office. Despite the efforts of many employers encouraging us back?into the physical workplace, the last thing many employees who are at home want to do is start commuting again.

I recently read that Google Plans To Cut Remote Workers’ Salaries By 25% with many other major tech companies doing the same. Employers need to be aware that the majority of people have a preference for working remotely in some capacity and they risk losing the skills and experience of some great people if they’re inflexible in their approach to remote working. Furthermore, employers may find it difficult to reject flexible working requests within the legal framework, on the basis that most employees have successfully worked from home whilst potentially also juggling childcare. The question pops up how does one define an appropriate salary based on location. Why should workers have to take a cut simply because their place of work has changed yet no doubt the outcome is the same - perhaps even higher as many seem to be more productive.

One potential implication of having a fully remote workforce is that employers can expand recruitment efforts from their local area to internationally wide. As talent becomes more of an international marketplace, some of my clients have been contemplating the idea of having more of a global approach to their workforce. As salaries differ extremely between West and Eastern countries that can have a significant impact to a P&L - if the right talent is found.

Yet here is the flip side to remaining office-based

• In-office workers can easily be given new and exciting tasks and projects to propel their careers forward as many discussions are occur in the tea room.
• In-office workers are given better perks - free lunches, tea and coffee, frequent short breaks, paid parking within the city.
• Remote workers being paid less and demoted - difficult to showcase performance and many companies offer less annual salary for a remote role.
• Remote workers being kept out of the loop on projects, conversations, meetings and anything else that happens in the office

Ultimately, in my opinion, there are two broadly consistent approaches to modelling compensation that you can use for distributed teams. I would love to know your thoughts on the below idea:

A?global salary?model for the compensation of remote employees pays everyone the same fixed amount for the role and experience level.

A?local salary?model for compensation of remote employees pays people based on a calculation of the local cost of living, and may also factor in the intensity of local labour market competition to adjust salary rates.

Yes, full-time work from anywhere can be a good thing but is not optimal for those who are in the earlier stages of their career. Younger people need to be out in the world, forging bonds, gaining mentors, and learning how things work — not sitting alone in front of a screen all day. However, with so much data showing productivity increases with a hybrid or work from a home model, I personally do not believe salary should be cut purely based on location.