How will your company work post-pandemic?
For those who have worked remotely during the pandemic, the question of whether a hybrid approach can be adopted more permanently is on everyone’s lips — with companies up and down the country assessing whether this alternative will prove viable in the longer term.
Meanwhile, in and amongst discussions about preferred working locations, queries have arisen around the impact on employee pay. A recent survey conducted by CIPHR — which polled 1022 UK workers — found that 73% of UK employees would accept a reduction in pay in return for being able to work remotely on a permanent basis. The median pay cut figure that all respondents said they would accept was in the region of 3.5%.
But can an employer cut the pay for a worker who, post-pandemic, now wants to work remotely some or all of the time?
Pay is a fundamental term of the employment contract. Terms and conditions cannot be changed unilaterally, without consent or consultation – such an approach by an employer to reduce pay would be a fundamental breach of contract, entitling the employee to resign and claim constructive unfair dismissal and possibly wrongful dismissal for outstanding notice pay. If the employee did not resign, they could continue to work ‘under protest’ and they may claim unlawful deduction of wages. Aside from the high risk of legal claims, an employee could raise grievances, or comment about the practice on social media, causing serious reputational damage.
However, as the results of the survey suggest, an employee whose preference is to work from home, may be willing to agree to a pay cut for the privilege, so it may be worth asking them if they would consent to a change.
The alternative legal process is to consult with them about the proposed change to their terms and conditions. Explain the business rationale as to why a pay cut is required, seek the views and objections of the employee, approach the issue with an open mind as to whether or not you can reach a consensus. If, at the end of the process, you decide to go ahead with your proposal and the employee does not agree, then the ultimate outcome would be a dismissal for Some Other Substantial Reason. They could be offered re-engagement on the new contract with the lower pay.
Some points to bear in mind here:
- Firstly, a dismissal for ‘Some Other Substantial Reason’ and the possibility of re-engagement is currently a hot topic. The Trade Union Congress (TUC) has stated that the practice of ‘fire and rehire’ has become ‘widespread during the pandemic’ and Unite the Union has launched a major national campaign to end this practice in the UK. The Government responded earlier this year to confirm that it will not legislate to prevent such situations, but the practice was described as ‘immoral’, and employers should seek every alternative before engaging in this tactic. ACAS has been asked to produce better, more comprehensive guidance for employers and we are awaiting this. In summary, whilst the avenue of ‘dismiss and re-engage’ is one that employers can explore, it is becoming a practice which is frowned upon.
- Secondly, what is the genuine business reason behind the proposal – and is it a reasonable position? If you are dismissing employees, even if they accept the reinstatement, there still needs to be a fair process and a fair reason for the dismissal.
- One of the benefits of remote working, is that it particularly assists women who, as a group, tend to bear the majority of childcare responsibilities. The ability to work from home (without a lengthy commute) and still be able to do the school drop-off and pick-up means that there is a generation of women who will be able to access a variety of jobs that would never have been available before. A policy of reducing pay for those working from home, is likely to indirectly affect more women than men – leading to indirect sex discrimination claims. Such claims can only be justified if the policy is a proportionate way of achieving a legitimate aim – and as above, what is the legitimate aim?
- There may also be equal pay considerations. If more women work from home than men, but those women are paid less than men for doing the same job – would this class as a material factor – which would defeat a claim of equal pay?
- Finally, changing the terms and conditions for 20 or more people at one establishment within a 90-day period, with a proposal to dismiss them if they don’t accept, will land you in collective consultation territory. With this comes additional consultation obligations, including the election of representatives, the provision of statutory documentation and minimum consultation periods.
So, whilst the CIPHR survey suggests that a majority would be prepared to reduce their pay, legally an employer needs to seriously consider whether this is a step they want to take, bearing in mind the above risks.
