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The legal considerations of employers cutting staff pay should they permanently work from home

11 August 2021

Commenting on the prospect of employers cutting employee pay should they decide to permanently work from home, Joanne Frew, UK head of employment law at DWF, highlights the legal considerations. 

"The COVID-19 infection rate is still high but the vaccination programme is going well.  Employees won't have to self-isolate if fully vaccinated from 16 August 2021 but millions could be self-isolating between now and then.  Many big name employers have made a U-turn and are delaying office returns until at least 2022 as COVID-19 continues to spread.  As with all things COVID-19 related, it isn't straightforward and an ability to flex and adapt to change will put any employer in good stead.  

"Employee engagement is crucial as government guidance is paired back and employers are given more discretion.  Unifying the workforce is more important than ever.  COVID-19 is a natural divider with opinions varying drastically depending on people's personal circumstances.  Employers will have the challenging role of bringing together a workforce so that people can work in a safe and inclusive environment.  

"With many businesses struggling it is unsurprising that they will be looking for ways to cut costs.  However, implementing sweeping pay cuts for homeworkers is not without serious risk.  The starting point is the employment contract.  If employers wish to implement pay cuts for homeworkers this would constitute a change to terms and conditions, one employees are unlikely to agree to.  Employers would need to go through a process to change terms and conditions and could expect to face serious challenges.   Coupled with this, employees would argue that the fact they work from home reduces overheads and if productivity has not diminished a pay cut would seem arbitrary.   Employers may also face discrimination claims where homework is a necessity during the pandemic due to childcare or a disability.  However, there may be situations where the job role has changed, parts of the role cannot be carried out away from the office, or the employee has opted to work from home.  In those situations, reduced pay may be appropriate.

"The relaxation of the isolation rules from 16 August 2021 provide a welcome change from a labour supply point of view, however the shift arguably creates a two tier workforce – those who are vaccinated and those who are not.  Recent stories have shown that some employers take a zero tolerance approach to employees attending work unvaccinated.  However, this approach is not without risk as an employees' vaccination status may be linked to a protected characteristics – for example, age, pregnancy or because of a disability.  It is important for employers to tread carefully when implementing any vaccination policy to reduce the risk of discrimination."

Key employment contacts:

Joanne Frew and Charlotte Lloyd-Jones

Further Reading