Google staff members are reportedly facing pay cuts of between 5% and 25% for choosing to work remotely on a permanent basis.
The tech giant is said to be using a company pay calculator that determines the remuneration based on whether they want to work remotely or commute to the office, according to an investigation by Reuters.
Known as the Work Location Tool, the calculator was launched in June and uses core-based statistical areas (CBSAs) defined by the Office of Management and Budget (OMB) to estimate the cost of living and commuting. This has resulted in pay cuts of between 5% and 25% depending on where the employee is based.
One anonymous employee told the news agency that they choose to commute to Google’s Seattle office for two hours every day in order to avoid having their salary cut by 10%. Others reported that employees have faced pay cuts as high as 25% for leaving San Francisco to work remotely, despite some working from the almost as expensive Lake Tahoe area.
IT Pro has contacted Google for comment.
The reports have raised concerns that Google’s actions could serve as a precedent for other companies to do the same.
Richard Fox, employment partner at Kingsley Napley, told IT Pro that UK employers “will need to be really careful in how they introduce any such policy”.
“They will want to consult with those affected and will have to guard against the possibility of discrimination claims," he adds. "But, however difficult an issue this may be, it will not go away and if the likes of Google, Twitter, and Facebook are looking at cutting salaries for those not working in the major conurbations, it is going to be looked at by others who may want to follow suit. Those in the technology sector may be particularly affected because of the ease with which they may be able to work from home rather than living and working in expensive inner City area."
Kate Hindmarch, employment lawyer at Langleys Solicitors, also agreed that pay cuts “can only be done by consultation and consent”.
“Under current [UK] law, if an employer wishes to vary terms and conditions of a current employment contract, they must firstly seek to reach agreement to the changes by consulting with the workforce, and any trade unions as appropriate,” she told IT Pro.
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However, she added that employees’ unwillingness to take the salary decrease could also lead to a practice known as ‘fire and rehire’, which sees employees being “effectively dismissed” and offered “the choice of accepting the new, usually less generous terms”.
“Most employees in this situation, particularly in the current economic climate, are likely to accept the new contract, whatever the terms, to avoid unemployment," adds Hindmarch. "If this is the case, then the employee may have a claim for unfair dismissal if they have more than two years of service."
Ultimately, “fire and rehire” is potentially lawful, but businesses must consider whether it is ethical. It is a high-risk strategy which employers should not take on without understanding the risks and potential reputational damage involved,” she said.
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