Should you pay remote or hybrid workers differently to on-site employees?

In an exclusive extract from his new book, Gary Cookson discusses this key issue

BY Contributor 16 Nov 2022

by Gary Cookson, author of HR for Hybrid Working

Perhaps the most difficult issue for many organizations to wrestle with is whether to adjust what remote and hybrid workers are rewarded (both from a pay and non-pay perspective). Google were notable among large multinational organizations (Facebook and Twitter were others) who received publicity for planning to cut the pay of staff working remotely, by around 10%. This was echoed by some (unnamed) UK government ministers suggesting that civil servants who do not return to the workplace full time should receive a pay cut also¹. The strong negative reaction to this, allied to the risks around engagement, discrimination and more, mean that this is a thorny issue for all organizations who consider it.

There are, as I’ve pointed out in earlier chapters, significant benefits to employer and employees from working remotely, and even in a hybrid way. There should be no need for employers to consider altering pay, but nonetheless remote and hybrid working may expose inequities in pay among employees that foster some resentment. Changing the levels of pay will require full contractual change processes (covered earlier in this chapter) but could create as many discrimination issues as they resolve. Speaking to People Management, Paul Seath, employment lawyer at Bates Wells, explained that it could be argued that remote working is chosen more by women to better suit their caring responsibilities, and therefore different levels of pay for remote workers would have a disproportionate impact on women².

Many of my clients have reserved the right to review or adjust pay where there is a change in location, but none have yet acted upon this, and it is likely the risks inherent in doing so that is holding back any changes – plus, the consideration of whether this is actually the right thing to do!

Some forward-thinking clients have begun to give employees more say in how their pay (as part of an overall reward package) is structured, and some others have begun making the process of determining pay much more transparent, so that everyone can see what inputs go into pay decision-making. One client has begun to move to a skills-based pay model, where the acquisition and deployment of new skills are linked to market rates and will result in a more fluid concept of pay. All of these approaches have attractions, and limitations – however one thing all of these employers have in common is that they realize that pay is but one aspect of a total rewards approach and that remote and hybrid working requires such an approach, and also increasingly needs a very specific and different approach to those working in the office.

My advice is to leave pay alone unless you really need to, but focus on how you can adjust and tweak reward in its widest sense – so let’s have a look at some of the things that could be on your radar.

As a start point, you could review the benefits that are only available to those who work in the physical workplace. Examples of this could be onsite food and drink, whether subsidized or free, but may stretch to onsite gyms, creches and more. Salary sacrifice schemes such as cycle to work schemes, commuter season ticket loans and subsidized or free car parking are also likely to need reviewing – and all of these are less relevant to remote and hybrid workers, meaning that the money that goes into providing them could be reinvested in providing specific benefits for remote and hybrid workers. Even things like a fantastic physical workspace don’t have the same attraction for remote and hybrid workers as they do for those in the office, so positioning this as a benefit is not as easy as some organizations may think in our new world of work.

You could usefully survey your employees, whether anonymously or not, to find out what current benefits they feel they would make more, or less, use of if working remotely or in a hybrid way and what new benefits would be appreciated. Having data to base any decisions on would be helpful and could show different insights, for example the data may show that:

Working parents have unique stressors in their remote work experience and access to additional childcare (babysitters, virtual tutors, even entertainers) may be well-received.
Additional funding to create an enhanced home office may be helpful, and that individualizing the set-up of the home office with funding to be used in whatever way the employee deems suitable would increase engagement and empowerment.
Those with elder care responsibilities in or near their homes may appreciate additional support for this, through provided partnership services.
That those whose remote location is not as well situated for access to services (banks, shops, and more) as the office may have been, and who may have used their office lunch break or commute to undertake some personal errands, may benefit from concierge service to help them complete the same errands while working remotely and without ready access to the places they would need to visit.
Employees may appreciate additional flexibility around taking sick leave and annual leave. For sick leave they may like to be able to take this in hours instead of days (explored in our next chapter), and for annual leave they may want the ability to take additional leave if they have produced the agreed output and outcomes for their role by a particular time (something the Virgin Group successfully introduced as far back as 2014 albeit without the link to remote or hybrid working).
Employees may miss the discounted food and drink and may like access to some subscription food and drink delivery services offered at a discount. They may miss onsite gyms and like access to digital fitness offerings instead.
Those employees who have taken on pets while working remotely or in a hybrid way may benefit from pet-sitting or dog-walking services or even discounted pet insurance.
Employees using personal devices for work activities, and vice versa, may benefit from support around identity theft.

There is clearly a lot to consider here. Many organizations already offer a wide range of benefits to go alongside their pay, and consider a total rewards approach, allowing employees to tailor their packages according to lifestyle, preference, and various other characteristics like age.

However, I’ve always said that one of the best rewards one can give anyone is a great line manager, and while this is something we will touch on in a later chapter also, one of the most important aspects of reward delivered by a great line manager is recognition, and this is something that needs reinforcing in a remote and hybrid working arrangement, lest out of sight becomes out of mind. It is important that managers make the effort to recognize remote workers more – a contact from them may be the only work-related human voice they hear that day.

HR for Hybrid Working covers everything that professionals need to succeed in a hybrid working model and manage the transition to this new way of working. It shows why and how contractual documents, policies, pay and reward terms need to change, how to manage changing employee expectations and how to assess and communicate to staff what work can be done partially remotely and manage the impact on company culture. There is also insight on how to adapt learning and development and wellbeing activities to ensure they support employee development.

Alongside expert guidance on how to assess what technology solutions are right for the business, HR for Hybrid Working explains how to manage inductions and exits from the organization when the location of employees is changeable. Packed full of advice, examples and case studies, this book also provides a dedicated section on the new skills needed by HR professionals as organizational roles, structures and processes change in a hybrid working model.