Employers across the country are preparing to slash pay for home workers as part of radical plans that could ignite a widespread backlash among staff.
One in ten companies plan on reducing pay or benefits for home workers after failing to encourage people back to their desks by using a host of incentives, according to a survey of over 1,000 employers by the Chartered Institute of Personnel and Development (CIPD).
Some 4pc of companies have already reduced pay or benefits for those who continue to work remotely, while 13pc are on the cusp of doing so.
Businesses have been scrambling to offer incentives to workers since lockdown restrictions were lifted so teams would voluntarily return to their desks. With many still shunning the office, some are now taking a tougher stance by telling employees they have to come back in.
Joseph Lappin, head of employment for law firm Stewarts, said unless an employment contract permits home working, then an employer can "normally reject requests to work full-time from home".
However, a growing number of companies are now considering allowing permanent home working — under the condition that remote workers receive less pay. The argument being that those who don't commute into city centre offices incur lower travel and lifestyle costs, and could live in cheaper residential areas.
Earlier this year, top City law firm Stephenson Harwood told staff they can work from home full time, if they agreed to a 20pc pay cut. For junior lawyers at the firm with starting salaries of £90,000, that equates to an £18,000 loss.
Facebook's Mark Zuckerberg also told staff at the height of the pandemic that employees working remotely will have their compensation adjusted depending on where they live. Those in cities where living and labour costs are higher would receive more.
Martin Luff, a lawyer for Vinson & Elkins, said he has been expecting more companies to slash the pay of full-time home workers post-pandemic, yet that has not materialised as competition for talent ramps up.
"When lockdowns eased and it became clearer that at least some degree of working from home was here to stay, I had anticipated that at least some employers would move quite quickly to differentiate pay and benefits between office and home workers, but I have not seen that happen,” he said.
“I think the main reason is that the competition for talent remains intense and employers are concerned about the dynamics of a two-tier workforce and potentially losing valuable staff."
Reducing pay for permanent home workers is likely to result in a backlash from staff. Stephenson Harwood employees have already hit back at the firm after it unveiled its controversial pay cut plans.
Ben Willmott, head of public policy for the CIPD, said employers that are planning to reduce pay or benefits should "recognise there are potential ethical and legal risks in this approach.
"It could also make it harder to recruit or retain staff if people working remotely are valued and rewarded less than those who have to attend their organisation’s workplace.”