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 (which may not even be a perk now, thanks to Coronavirus), 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.