Opting to WFH? Think Again as Google is Preparing to Slash the Pay of its Remote Workers

In 2020, the COVID-19 pandemic saw businesses across the globe having to close their doors and embrace remote working practices. For some employers, there was an initial worry that staff would be less productive, especially without the technology and support they were used to.

But thanks to cloud-based networks, employee visibility software, and productivity tools, teams were still able to work and collaborate from home. As a result, 72% of organizations have started adopting permanent remote-working models.

While many businesses are adopting work from home (WFH) models and hybrid working styles, Google is reviewing its compensation packages for those who choose to work remotely rather than return to the office.

So if you’re thinking about opting to work from home permanently, you might want to think again as Google is planning to slash pay for those who do.

The rise of hybrid work

Many companies are implementing a hybrid work schedule, meaning employees have the choice to work from the office, from home, or a mixture of both, depending on what works best for them. By separating the ‘where’ of work from the ‘how’, businesses have found that they can empower employees to choose the working style and location that works best for them.

Interestingly, a study by Owl Labs found that 22% of remote workers tend to be happier in their jobs than those who never leave the office. This could be for a number of reasons, but one thing is for sure, this can lead to an increase in productivity and better work-life balance for all. So it’s a win-win for both parties.

And this hybrid way of working has proven popular over the last couple of years that big-name brands such as Adobe, Dropbox, and Cisco are permanently implementing this model, allowing employees to choose whether they want to return to the office or continue to work from home.

Google is considering altering its compensation packages

Despite many companies now choosing to offer hybrid working styles, this comes at a cost in some cases.

Google has often been seen and praised as a great employer, famous for offering quirky perks such as free food, at-work massages, nap pods, and arcade games in the workplace. However, like other organizations, Google is offering the option to work from home. But the organization is also considering making pay cuts to those who opt to work remotely permanently.

The size of the pay cut will be dependent on the location of the worker to keep in line with living costs. For example, those that live and work in New York could expect to take a 15% pay cut for working from home, whereas those in San Francisco could see pay cuts as high as 25%.

Though this hasn’t been confirmed just yet, talks by Google senior officials are in place, and these changes could come into force in the near future.

How will a pay cut impact the remote workforce?

While Google might feel completely justified in its decision to reduce pay, there are bigger implications they need to consider first.

Although no one can say for sure until it happens, cutting pay could harm employee morale and lead to increased rates of staff turnover.

One study found that staff working remotely were 13% more productive than those working from the office. So essentially, those working from home will be getting paid less while achieving more - which doesn’t really add up.

What’s more, although almost two-thirds (65%) of workers who could work entirely remotely said they’d be willing to take a 5% reduction of pay to stay at home, they overwhelmingly said they wouldn’t take a 25% pay cut. Unfortunately, this could be the situation in some cities if Google implements their new pay grades.

Not to mention that with 83% of businesses planning to offer more flexible work policies, post-COVID, taking a step back could leave Google behind its competitors. And with 39% of professionals saying they’d consider quitting their jobs if their employers weren’t flexible about remote work, pay cuts could cost them good workers.

What are the risks of reducing pay when it comes to employment contracts?

There are several ways businesses can save money; one example is Pret a Manger, who stopped paying workers for their breaks in September 2020 in an effort to save money during the pandemic.

But what are the risks of reducing pay when it comes to employment contracts, and can Google do it?

In most cases, employers have the right to cut salaries and/or hours as long as this isn’t done discriminatorily or in breach of a contract. And in any case, employees must be notified well in advance to enact a pay cut.

For those protected from pay cuts by employment contracts or union protections, employers may have to wait until the contract is up for renewal and then propose a lower salary to either be accepted or rejected by the employee.

So, the risks of reducing pay can be mitigated by understanding employment law and the contracts of those involved. However, this can’t make up for some of the other possible challenges that come from pay cuts, such as dips in morale, lower productivity, employees feeling underappreciated, and possibly higher staff turnover.