Employees at tech giant Google are reportedly facing a salary cut if they choose to work from home permanently.
The move comes as part of a new pay policy highlighting how the world’s biggest companies are adapting to flexible working after the pandemic.
In an experiment taking place across Silicon Valley, which includes tech organizations such as Facebook and Twitter who often set trends for big companies, workers are to have their salaries cut if they move away to cheaper areas.
Reuters reported this week that Google is offering employees a calculator that allows them to see the effects of a move. But in practice, some remote employees, especially those who commute long distances, could experience the pay cuts without moving their address.
Smaller tech companies like Reddit and Zillow are shifting to pay models that are unrelated to where employees live due to the advantages of hiring, retention and diversity.
“Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from,”
a Google spokesperson said, adding that pay will differ from city to city and state to state.
One Google employee, who asked not to be identified by Reuters for fear of retaliation, typically commutes to the Seattle office from a nearby county and would likely see their pay cut by about 10% by working from home full-time, according estimates by the company’s Work Location Tool launched in June.
The policy has also raised concerns that people working in the same office could end up with far different earnings. Those who live furthest away could take home less.
Screenshots seen by Reuters showed that a former commuter to Google’s New York office living in Stamford, Connecticut, would be paid 15% less if they worked from home for good. By contrast, a colleague who worked remotely from their home within New York City would not lose any money.
Similar disparities were identified in and around Seattle, Boston and San Francisco.
The debate over salary v location is raging across the United States among many industries.
Some of America’s largest banks are increasing keen for their workers to return to offices, yet many bankers reluctant to return to their desks after seeing out the pandemic in large rural boltholes.
James Gorman, Morgan Stanley’s CEO, recently told colleagues that they should not expect lavish Wall Street pay packages if they did not return. “If you want to get paid New York rates, you work in New York. None of this: ‘I’m in Colorado . . . and getting paid like I’m sitting in New York City.’ Sorry, that doesn’t work.”
Google said that since it had launched the pay calculator, 10,000 staff had asked to work from home permanently or to transfer to a different office.
But what happens in the U.S. doesn’t necessarily translate across the pond to Europe and the U.K.
Marcus Storm, of the United Tech and Allied Workers union, said that Google would set a “dangerous precedent” if it tried to foist the changes on U.K. staff without consultation.
“It seems very arbitrary and may be open to a legal challenge. You are discriminating based on where a worker lives not on their ability or even their ability to come into the office,” Storm said.
The legal view
Lawyers said that British and European companies had to seek agreement with staff before making big changes to conditions.
Joseph Lappin, head of employment at Stewarts, a law firm, said that British workers had “greater protections” than their counterparts in the U.S. “Employers cannot unilaterally change a key term of the employment contract. Pay will always be a key term,” he said.
Some businesses, such as U.S. technology giant Cisco, have put in place a hybrid working plan that has no mandates about how often employees go into the office.
Cisco expects that less than a quarter of its workforce will want to be in an office for three or more days a week.
But other firms, such as Goldman Sachs, want workers to return to offices. David Solomon, Goldman’s CEO, said in February that working from home was “an aberration” rather than “the new normal”.
The Chartered Institute of Personnel and Development (CIPD), which represents human resource professionals in the UK, said it was always “the safest option” for firms to seek express written agreement from employees before changing the level of their pay.
In its guidance to employers, it says that imposing a pay cut is a “high-risk” approach, since workers can bring claims for breach of contract or even constructive unfair dismissal.