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Will Working From Home Post Iso Mean a Pay Cut?

After years of speculation and resistance from many employers, necessity has forced almost every industry around the globe to commit to the work from home model. The results are in working from home has proven itself to be a change that most businesses and workers can successfully adapt to. Now, with restrictions in various States across Australia set to lift, it will be interesting to see whether businesses integrate working from home options into their ongoing work practices. Some re-adjusting will need to be done in businesses that choose to move forward with a permanently hybridised workplace that combines remote and in-office working options. Specifically, I predict that salary will become linked to where workers choose to perform their roles, and that those who choose to work from home will face a pay cut. 

Why would employers cut the pay of those who choose to work from home?

Aside from overarching economic factors, I see two key reasons why employers may request a pay cut from employees who choose to work from home; the first is employers may perceive staff who work from home to have less responsibility or hands on duties, and the second is that the ability to work remotely is regarded as a non-monetary benefit or perk that is traditionally given in lieu of salary. 

In this article, I’ll be examining these issues in depth and looking at the other side of the argument as well, so whether you are an employer or an employee, you’ll have a clear understanding of some of the issues that come to bear when discussing flexible working terms. 

Why would employees who work from home be seen to have less responsibility?

Prior to the enforced shut down of workplaces, one of the key reasons that some businesses were reticent to experiment with the working from home model was due to the dynamic nature of the roles within their company. For those in roles where success was measured purely in a quantitative way (i.e. the volume of code written, the number of administrative documents cleared, billable hours, new business development/ pitching), working from home is a no brainer. However, most roles (particularly in the PR, advertising and digital industries that I recruit for) are multifaceted and include responsibilities such as client engagement, staff management and mentoring, collaboration and workplace culture participation. These responsibilities tend to be carried out most effectively when the person is physically in the office. Although workplaces have found ways of adapting these responsibilities to the work from home model, the results are clunky at best. Because of this, employers may choose to split the responsibilities between two roles with one in the office, and one working from home and both with a lower salary than an in-office role where the responsibilities are combined. 

The other side of the argument

Whilst working from home is often perceived to involve fewer responsibilities (I personally don’t agree with this) and therefore result in less productivity, studies suggest precisely the opposite. 

A 2014 Harvard Business Review Study found that when employees work from home they have a productivity boost equivalent to a day’s work as well as a 50% lower attrition rate, fewer sick days and shorter breaks. Additionally, the study, having employees work from home helped the company save $2,000 a month on rent as they were able to reduce their office HQ space. 

Similarly, an Airtasker study (last updated in March 2020) of 1,000 remote workers found they worked on average 1.4 days more every month or 16.8 more days every year than their in-office colleagues. The Airtasker study also found businesses who permitted remote work improved their employee retention rates, as 1 in 4 of the surveyed workers said they had to quit a job due to long commuting times. 

This data also suggests that remote working is both more productive and more cost-effective than physically working in the office. When you look at it this way, the responsibilities of a particular role are not so much lessened when an employee works from home but shift to place a greater emphasis on productivity in their areas of expertise. It would remain a matter of debate as to whether or not this increased productivity and cost savings would be more valuable to a business than the benefits of placing employees in more dynamic in-office roles, but the key takeaway is that an employee’s performance shifts rather than lessens when they work remotely. 

Why would working from home be offered in lieu of salary?

Traditionally, the option to have flexible working hours (leave early to pick the kids up or attend a gym class, knock off early on a Friday) or conditions has been treated as what we in the recruitment industry call a ‘non-monetary benefit’.  A non-monetary benefit (otherwise known as a job perk) is something that is included in salary negotiations but is non-monetary. 

In the recruitment industry, non-monetary benefits such as travel allowances, car parks, additional annual leave, gym memberships, and flexible working conditions are used as bargaining chips in instances where employers are not able to immediately offer a higher salary at offer stage or where employees are seeking a role that aligns with an adjusted lifestyle and willing to take a pay cut.   In other words, non-monetary benefits are directly linked to a professional’s perceived industry value. When looked at this way, it’s unsurprising that some employers may see working from home as a privilege included as part of a salary package. 

Let’s Get Real

In 2018, Forbes wrote that ‘working from home is no longer a privilege’, implying that it is now the right of all workers to have flexible working opportunities in the same way that they get sick leave, annual leave, and a lunch hour. In Australia, the eight-hour working day agreement which most businesses still follow today was passed in 1856. 164 years ago, commuting to work for eight hours made sense, as most workers lived within walking distance of their workplaces and had manual labour jobs which could not be done remotely. In the 21st century though, people work longer hours than at any other time in history and often take their work home, as technology has enabled certain aspects of work-life such as emails and calls, blurring the lines between professional and private lives. 

In addition to this, urban sprawl means that commuting takes longer and is more expensive than ever before. As workers have the technology to remain connected with their workplaces wherever they are and struggle to commute, the traditional eight hours in the office model no longer makes sense (or is realistic) in the modern world. Given that this technology means we are now working harder than ever, perhaps it should also be utilised to improve our quality of life by eliminating the costs and time associated with commuting to an office.