Can I reduce an employee’s pay if they are working from home?

A cabinet minister has commented that civil servants who won’t return to the office could have their pay cut, stating that as they don’t have commuting costs such employees have effectively had a ‘pay rise’.

Its not the first time comments have come out of government that have Employment Lawyers shaking their heads in disbelief. This government minister went on to state ‘if people aren’t going into work, they don’t deserve the terms and conditions they get if they are going into work’.

Terms and conditions of course being an extremely broad term, not just limited to pay. Is this chap suggesting staff should be stripped of other employment benefits as well?

The reality is, unless you have a contractual right to vary the pay of your employees (highly unusual), you will not be able to change their pay simply because they are working from home or have less commuting costs. To do so would likely be breach of contract and hand an employee a constructive dismissal claim. The idea that pay is based on the expense of getting to work is ludicrous, what about staff who walk to work, but are working from home?

If you have contracts that specify pay is made up of different elements, so for example basic pay, overtime payments, tech allowances, car allowance and travel expenses, you may have the ability to remove the elements that have been provided to account for commuting, however we would always suggest this is done in consultation with employees and engaging them in the decision. A Friday afternoon email stating that an element of pay will be withdrawn starting Monday never goes down well.

For employees who typically would work from the office pre pandemic and now want to stay at home, you may have the chance for a quid pro quo- the offer of a new contract which changes their place of work from being office based to being home based/hybrid, in return for a change to salary, however threatening to withhold permission to work from home/ a flexible working request unless a pay change is agreed to could lead to allegations of breach of trust and confidence and ultimately constructive dismissal.

The take away message, any changes to terms and conditions should be done with engagement, consultation and agreement and as an employer your behaviour needs to be reasonable. If you have an employee who is refusing to return to work and has been requested to do so, and wishes to continue to work from home, you may have more of a leg to stand on, but we would still strongly suggest taking legal advice before changing the core terms for any of your employees.

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