loading...
Cover image for Pay cut to work remotely - Fair deal?‍

Pay cut to work remotely - Fair deal?‍

hrishikesh1990 profile image hrishikesh1990 Originally published at remote.tools ・2 min read

Let me start by asking you a question. Say, your employer is ready to offer you the perk of permanent remote work but asks you to take a pay cut (5-20%), would you take it?

A recent survey indicates that 45% of UK employees are indeed ready to take a pay cut to continue working remotely.

Let's first look at some of the arguments for the proposal.

1) Remote working = reduced costs. So, your net take home pay is still the same.

Employers argue that remote working results in:

  • Reduced transportation expenses
  • Less money spent on meals or outings with co-workers
  • Tax concessions given you have a home office
  • Reduced miscellaneous expenses like dry cleaning, wardrobe etc.

So effectively your take-home pay is still the same or even higher.

Counter

  • Companies also save significant costs when employees work remotely. So looking at just reduced expenses for employees is a narrow, one-sided view.

  • On the contrary, individuals now have to pay extra for setting up their home office, additional bills, backup connections, co-working passes etc. So employers should in fact seriously consider reimbursing these expenses rather than thinking of a salary cut.

2) Remote work = increased risk. The risk & lack of trust is built into the lower salary.

Some argue that a remote hire comes with added risk. When you hire someone who doesn't meet your standard but works in office, there's still a possibility to manage or correct that since it's easier to have constant informal contact. The bigger risk with remote working is hence built into the salary.

Counter

  • While the argument of additional risk might be accurate, proposing a lower salary doesn't solve the root problem.

  • Instead companies could do either of the two:

    • Don't compromise on hiring. Hire only the best remotely. While companies like GitLab, Doist etc. have been doing this for years, the same may not be possible for smaller startups.
    • Reach a compromise where you negotiate a lower pay with the candidate for an initial probationary period. You also commit to a pay raise after the initial period.

For companies, pay cut for remote work could be a serious disadvantage

The truth is it's hard to convince people to switch jobs by going down in salary. On the contrary, people expect at least 10-20% raise to change jobs.

Now, if you decide to cut down the pay of your existing employees for offering the perk of remote work, it will likely result in unhappy employees and start showing negative effects in their work.

Companies are seeing this all wrong when they think of lower pay in return for the benefit of working remotely. Sure it's a perk for employees but that shouldn't mean a compromise elsewhere. Instead companies should push employees to bring out the best version of themselves & perform even better now that employees have this additional freedom.

I write regularly about tech, products, startups on Twitter. You can follow my updates there.

Discussion

pic
Editor guide
Collapse
documentednerd profile image
Kevin Mack

I would vote no, this is an unrealistic ask because to be honest. Studies show that most workers who work from home, give more hours to their job not less. And the employer gets to save money on building, power, internet, etc by having an employee work from home. So this means that they are seeing a bigger benefit to an employee working from home. Not saying that the employee doesn't benefit, but I don't feel its appropriate to ask for the employee to take a paycut when they stand to save money.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

Exactly my argument too :)

It's fine to consider remote work as a perk, just don't ask for a compromise elsewhere in exchange for the benefit.

Collapse
natescode profile image
Nate

No, same work = same pay. Plus working remotely often means you never leave the office both literally and figuratively.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

+1. All stats show that remote work => more work hrs, higher productivity, more work done. If anything, those who work remotely should be compensated higher.

Collapse
natescode profile image
Nate

Agreed! I love working remotely. Saves on laundry :-)

Thread Thread
jwp profile image
John Peters

True but pajama costs go up...

Thread Thread
natescode profile image
Nate

Pajamas? Who said anything about pajamas? 😏#Pantsless

Collapse
_garybell profile image
Gary Bell

Not a chance. If it was said that remote workers at my company would need to take a pay cut to stay working remotely, I'd tell them to keep me an office space (and then look for another job).

I'm paid what I am worth (actually probably less given how many pies I have fingers in, but I am very happy all the same). Working from home doesn't make me worth any less, nor my contribution to the company any less.

My commuting costs may be less, but my car maintenance is actually higher because the car is sat doing nothing more. I have increased electricity consumption as a result of powering my work machine (which is pretty hefty), and having air conditioning on to cool the room because my kit throws out a ton of heat.

I've also got to (potentially) buy other office equipment I might not have otherwise, and that would be provided by work. Some people don't have a proper chair to work on (I cringe when I see the pictures of people using dining chairs or other non-adjustable chairs as part of their office), or replace sooner than I might have needed to the same equipment.

Whilst I am currently enjoying working from home, I would rather be allowed to go to the office for some days per week to have the faster-paced interactions. It's a bit of an inconvenience to me to be working from home at times. It would be worse if I was getting financially penalised for the "privilege".

Collapse
bloodgain profile image
Cliff

"Some people don't have a proper chair to work on"

100% right, Gary!

When we went more work-from-home, I bought a $1300+ Steelcase office chair. I'm a big guy, so I needed a specialty chair, but proper ergonomic chairs that won't fall apart in a year cost hundreds of dollars. The Haworth chair they gave me at work isn't much cheaper than mine. And even with that, some people might need sit/stand desks to avoid staying in the same position all day. It's an expensive thing to set up the first time.

You can get in cheaper if you have a local used office furniture place. I got a nice, sturdy adjustable task chair there for $150, but that was just a good deal on a lesser-known brand that they had gotten a whole lot of at once and needed to clear out. But the availability in those places could go down sharply after the first round of companies dumping furniture they don't need for offices they don't have any more.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

Great points. I just wonder why people are ready to give in so easily. 45% respondents agreeing to a pay cut is astonishing and frankly concerning too. Same work should mean same pay.

Collapse
danniannie profile image
danni.

Definitely not. You're hired to do a job at the salary you've mutually agreed. It wasn't on the proviso that you need more money to get there and eat out. You're paid that because you're worth it and that's what you get for doing that job.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

Absolutely with you on this. My thread on Twitter is more vocal :)

Collapse
azaleamollis profile image
Anna Monus

Their pay should actually increase, as the costs (renting office space, electricity, heating, internet, amortization of office equipment, in-office perks, tools, etc) of the company significantly decrease.

Collapse
gnowland profile image
Gifford Nowland

yeah exactly, their costs go down but your costs go up. think: AC/Heat all day, lights all day, etc.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

Absolutely. Plus individual costs increase because of the extra bills, need for reliable backups, home office setup etc. I am all for regular reimbursements for this.

Collapse
itsasine profile image
ItsASine (Kayla)

My company addressed concerns of us being full COVID remote and taking on additional business expenses by saying to come into the office if you don't want to pay for office things and electricity.

So I got a new job for more pay, where I can factor the salary negotiations into my remote work costs.

The entire (now much smaller) engineering department was to be fully remote and cubicles were taken over to move to hoteling and removing half of them for distancing, so it's not like we even could reasonably work from the office if we were comfortable doing so. And most people aren't.

I've bought a bunch of things to make fake walls in my apartment to give me an "office" and improve my desk equipment, but I'm fine taking on that as I game and can use this stuff elsewhere. But I don't commute, so no savings there, and my electric bill is practically double. I already had good internet (again, gaming) but I know people who are trying to do this on their ancient connections because there's no better option without doubling it.

I was very easily taking a pay downgrade if I were to continue to work remotely as they intend for engineers due to taking on business costs and to be told that my paycheck would be reduced as well would just be insulting.

Collapse
hrishikesh1990 profile image
hrishikesh1990 Author

Thanks for sharing this Kayla. Your previous company made a choice to force their costs onto engineers and eventually ended up losing you. I am quite sure lot of other companies would learn this the hard way. It's going to be tough for them to retain people & get work done with a pay downgrade.

Collapse
jankapunkt profile image
Jan Küster

In times of COVID it is totally irresponsible to not offer remote work without any cuttings. Additionally the employer saves money by reducing the required space at the office, the additional infrastructure is usually already established, due to sales people and consultans often work remote, as they travel a lot.

At the same time the employee has increased costs - having an extra room for working is in some cities a pure luxury. If famili with children is involved say goodbye to your savings and private retirement funds. Cooking at home can be expensive, if electrical power costs a lot in your region and any heating devices that is run by electricity is consuming A LOT. If it's hot you have to run your air conditioning and cooling devices, consuming electricity, if it's cold you have to heat.

You have to pay for the desk and chair (the good ones can easily together cost an equivalent of a monthly income), for the screen, the desktop, utilities like keyboard, mouse.

So the added risk is mostly at your side. The risk at the employer side is losing control but let me tell you, you don't want to work at a place where your boss, the management or the C-people want to micro manage things, these are usually dead horses.

Collapse
mellen profile image
Matt Ellen

100% no.

They are paying me to produce things. It does not matter where I do it. THEY are reducing costs by not having to pay for electricity, bandwidth and office space for me.

If they ask you to take a paycut to do the same job this is a red flag.

Collapse
xaphers profile image
Elvin Mendoza

You forgot to account electric and internet bills. In some countries may be cheaper but there are other countries are not cheap. Remote work uses employee's resources. It's mostly like a win-win for a company in terms of cutting costs. Some are already underpaid with long hours of work yet if you got a pay cut to get to work from home is actually a loss for the employee.

Collapse
elmuerte profile image
Michiel Hendriks

I would expect a pay raise, or compensation for providing and taking care of my own work environment.
Working from home means increased electricity, heat, water, internet usage. Also wear and tear of various utilities. Increases expenses because I now have to buy my own coffee, etc.
Working from home a lot of the cost of running an office is moved to individuals.

Collapse
wclayferguson profile image
Clay Ferguson

As a developer, if your employer cuts your pay for any reason whatsoever, walk away. Resign. They are saving money by having less office space overhead. Don't let them trick you into thinking it's a cost for them. Even it if was a cost, I'd still say a pay cut should be met with an immediate resignation, regardless of any other factors.

Collapse
marko911 profile image
Marko Bilal

Not a chance. First of all what business is it of the employer to be concerned about how much I take home ? All that should be considered is what value does the employee bring to the company. Nothing in opposite direction. My employer should not be concerned about where I live , what my expenses are , what my net pay is etc. If they do, they're trying to find excuses to pay you less.
If they can get away with paying you less, you aren't worth that much anyway.
So really, if someone is squeezing you like this, they are either very sneaky / sinister or you have no leverage against them.

Collapse
rfindley profile image
Ryan

I’d also caution that in many instances you can’t actually take credits on your taxes for work at home expenses such as internet, utilities, etc. so that’s not a blanket benefit to the worker.

Collapse
evforija profile image
kristin ides hope

Agreed, this is a common misconception - I am not a tax lawyer so take this with a grain of salt, but I have been a remote contract worker as well as a remote full-time employee (FTE) and I believe it is only if you are a contract worker that you can file self-employment taxes. If you WFH but you are a regular FTE with full benefits and your company pays taxes to employ you, you can't deduct ANYTHING on your taxes related to your job. At least that's what TurboTax told me.

Collapse
eljayadobe profile image
Eljay-Adobe

From the same company then, would I get a 20% pay increase to work not remotely?

Collapse
loouislow profile image
Loouis Low

Work quality cut, fair deal?

Collapse
peledzohar profile image
Zohar Peled

Working from home is not the same as working remotely. Also, remote work is harder. So for me, the answer would be absolutely no.