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Can homeworkers be paid less?

Employees are now gradually returning to the office, following months of being ordered to work from home. In doing so, a debate has started over whether  homeworkers should be paid the same as their commuting colleagues.

An unnamed Government minister has commented that civil servants who do not want to return to the office should have their wages cut, as without the commuting costs they have effectively had a pay rise.

This prompted a strong response from the civil servants’ union, Prospect, who responded that ministers ought to ‘dial down the rhetoric’ and focus on negotiating the return to work with their staff.

It is not just the civil service where this debate about lower pay for homeworkers is taking place – Google have also announced that their US employees who choose to work from home may have a permanent pay cut (though they have not stated they will roll this approach out to the UK).

Before considering this step, employers should be aware that there is significant risk associated with changing the terms of an employee’s contract.

To start, employers should check the terms of the employee’s contract to see if they have the right to make the change. If not, the employer could seek the employee’s express agreement to the change, which in this case, would mean asking the employee to consent to a pay cut.

As employees are highly unlikely to agree to such a change to their contract, the employer may then have to make the change unilaterally and rely on the employee not opposing it. However, such an approach may open the employer up to a breach of contract claim.

Employers should be aware that there is significant risk associated with changing the terms of an employee’s contract.

Alternatively, the employer could terminate the employee’s existing contract, and re-engage them on new terms (including the new pay terms). This ‘fire and rehire’ approach also carries significant risk, particularly for employees with more than 2 years’ service, as it can lead to unfair dismissal claims. It also has the potential to damage both reputation and morale.

In addition to the above claims, creating a ‘two tier’ workforce by reducing the pay of homeworkers may also lead to discrimination claims, particularly if one group is more affected than other (for example, working mothers may be more likely to work from home, which could lead to a claim for sex discrimination).

Employers must also be aware of the risks of an equal pay claim. If an employee at home does the same work, with similar responsibilities and requirements, as a colleague in the office, they may claim they are owed equal pay for equal work.

The debate is only just beginning, but employers who successfully navigate the return to the workplace will be those who engage in meaningful discussions with their employees throughout the process.

Such decisions should not be made lightly, and employers are strongly encouraged to seek legal advice before implementing such a change. Our employment law team are more than happy to assist with any queries you may have.

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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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