Let me start by asking you a question. Say, your employer is ready to offer you the perk of permanent remote work but asks you to take a pay cut (5-20%), would you take it?
A recent survey indicates that 45% of UK employees are indeed ready to take a pay cut to continue working remotely.
Let's first look at some of the arguments for the proposal.
1) Remote working = reduced costs. So, your net take home pay is still the same.
Employers argue that remote working results in:
- Reduced transportation expenses
- Less money spent on meals or outings with co-workers
- Tax concessions given you have a home office
- Reduced miscellaneous expenses like dry cleaning, wardrobe etc.
So effectively your take-home pay is still the same or even higher.
Counter
Companies also save significant costs when employees work remotely. So looking at just reduced expenses for employees is a narrow, one-sided view.
On the contrary, individuals now have to pay extra for setting up their home office, additional bills, backup connections, co-working passes etc. So employers should in fact seriously consider reimbursing these expenses rather than thinking of a salary cut.
2) Remote work = increased risk. The risk & lack of trust is built into the lower salary.
Some argue that a remote hire comes with added risk. When you hire someone who doesn't meet your standard but works in office, there's still a possibility to manage or correct that since it's easier to have constant informal contact. The bigger risk with remote working is hence built into the salary.
Counter
While the argument of additional risk might be accurate, proposing a lower salary doesn't solve the root problem.
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Instead companies could do either of the two:
- Don't compromise on hiring. Hire only the best remotely. While companies like GitLab, Doist etc. have been doing this for years, the same may not be possible for smaller startups.
- Reach a compromise where you negotiate a lower pay with the candidate for an initial probationary period. You also commit to a pay raise after the initial period.
For companies, pay cut for remote work could be a serious disadvantage
The truth is it's hard to convince people to switch jobs by going down in salary. On the contrary, people expect at least 10-20% raise to change jobs.
Now, if you decide to cut down the pay of your existing employees for offering the perk of remote work (which may not even be a perk now, thanks to Coronavirus), it will likely result in unhappy employees and start showing negative effects in their work.
Companies are seeing this all wrong when they think of lower pay in return for the benefit of working remotely. Sure it's a perk for employees but that shouldn't mean a compromise elsewhere. Instead companies should push employees to bring out the best version of themselves & perform even better now that employees have this additional freedom.
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Latest comments (26)
In times of COVID it is totally irresponsible to not offer remote work without any cuttings. Additionally the employer saves money by reducing the required space at the office, the additional infrastructure is usually already established, due to sales people and consultans often work remote, as they travel a lot.
At the same time the employee has increased costs - having an extra room for working is in some cities a pure luxury. If famili with children is involved say goodbye to your savings and private retirement funds. Cooking at home can be expensive, if electrical power costs a lot in your region and any heating devices that is run by electricity is consuming A LOT. If it's hot you have to run your air conditioning and cooling devices, consuming electricity, if it's cold you have to heat.
You have to pay for the desk and chair (the good ones can easily together cost an equivalent of a monthly income), for the screen, the desktop, utilities like keyboard, mouse.
So the added risk is mostly at your side. The risk at the employer side is losing control but let me tell you, you don't want to work at a place where your boss, the management or the C-people want to micro manage things, these are usually dead horses.
100% no.
They are paying me to produce things. It does not matter where I do it. THEY are reducing costs by not having to pay for electricity, bandwidth and office space for me.
If they ask you to take a paycut to do the same job this is a red flag.
You forgot to account electric and internet bills. In some countries may be cheaper but there are other countries are not cheap. Remote work uses employee's resources. It's mostly like a win-win for a company in terms of cutting costs. Some are already underpaid with long hours of work yet if you got a pay cut to get to work from home is actually a loss for the employee.
Everyone loves to make it look ideal but put in prospect the issues some people might have at home when working. I think the employee should decide himself based on his or her own needs. We switched our work entirely from home, and even for our billing processes, we decided to enable a recurring payment system with the help of probill.com/. It may seem impossible to control your team from home, but you can easily create a thriving environment with good planning and dedication. Try adding an implementation that can automate some of your company's functions and feel the difference.
I would expect a pay raise, or compensation for providing and taking care of my own work environment.
Working from home means increased electricity, heat, water, internet usage. Also wear and tear of various utilities. Increases expenses because I now have to buy my own coffee, etc.
Working from home a lot of the cost of running an office is moved to individuals.
As a developer, if your employer cuts your pay for any reason whatsoever, walk away. Resign. They are saving money by having less office space overhead. Don't let them trick you into thinking it's a cost for them. Even it if was a cost, I'd still say a pay cut should be met with an immediate resignation, regardless of any other factors.
Working from home is not the same as working remotely. Also, remote work is harder. So for me, the answer would be absolutely no.
I’d also caution that in many instances you can’t actually take credits on your taxes for work at home expenses such as internet, utilities, etc. so that’s not a blanket benefit to the worker.
Agreed, this is a common misconception - I am not a tax lawyer so take this with a grain of salt, but I have been a remote contract worker as well as a remote full-time employee (FTE) and I believe it is only if you are a contract worker that you can file self-employment taxes. If you WFH but you are a regular FTE with full benefits and your company pays taxes to employ you, you can't deduct ANYTHING on your taxes related to your job. At least that's what TurboTax told me.
From the same company then, would I get a 20% pay increase to work not remotely?
Not a chance. First of all what business is it of the employer to be concerned about how much I take home ? All that should be considered is what value does the employee bring to the company. Nothing in opposite direction. My employer should not be concerned about where I live , what my expenses are , what my net pay is etc. If they do, they're trying to find excuses to pay you less.
If they can get away with paying you less, you aren't worth that much anyway.
So really, if someone is squeezing you like this, they are either very sneaky / sinister or you have no leverage against them.
Work quality cut, fair deal?