As some employees begin to ponder the possibility of working remotely on a permanent basis, some employers are floating the idea of trimming pay for those who want to relocate far away from the office.
Employers in Silicon Valley, where six-figure salaries are often barely enough to scrape by given exorbitant housing costs, appear particularly keen on the idea.
Facebook has famously warned employees that if they permanently relocate to an area where the cost of living is lower, they should expect a pay cut.
But can employers really trim paycheques for those who work from home?
It depends, says Toronto employment lawyer Andrew Monkhouse.
Location-based pay is nothing new, he notes. In some public sector roles, like provincially-appointed judges, pay is influenced by geographical considerations, he says.
And the practice had been catching on the private sector even before the pandemic, with companies offering higher pay for employees living in pricier locations, he adds.
But employers cannot unilaterally downgrade an employee’s pay, unless regional payscales are part of the original employment contract — which is very rare in Canada, Monkhouse says.
The vast majority of employment contracts in this country don’t have any clauses about geographic location or cost of living other than to mention you have to report to work at a specific address, he adds.
In that scenario, “the employer can’t really say to their employee, ‘we want you to work from home and we also want you to take a 25 per cent pay cut’,” Monkhouse says.
But if it’s the employee asking to switch to permanent work-from-home mode, then the employer could impose a pay change as a condition for accepting the request, he adds.
Employers could also decide to skip a discretionary pay bonus or cost-of-living increase for employees who’ve permanently moved to a cheaper location, Monkhouse says.
Some HR experts worry this could lead to more pay discrimination.
“If I have a family of six and need to move to a bigger house … how does that factor in?” says Allison Venditti, who runs Careerlove, a career coaching service for parents.
“Is my personal information going to be used against me to determine my salary?”
Greater acceptance of remote work has the potential to create more opportunities for marginalized groups, says Helen Ofosu, an HR consultant and career coach.
It could mean more good, government jobs for Canadians who live far away from the large cities where public-sector employers tends to cluster, she notes.
And the shift to working from home is already normalizing the collective perception of workers with disabilities for whom working in the office is not an option, she adds.
Ofosu recalled clients with disabilities who struggled to reach a work-from-home arrangement with their employer.
“Now that everybody’s at home, there’s really no distinction,” she says.
But location-based pay could work against some of these positive impacts, according to Ofosu.
“If somebody is doing the same work and because they’ve now moved out of the big city, their pay is cut back — that just doesn’t really make sense, no matter how they negotiate that,” Ofosu says.
And there is a potential for location-based pay to lead to practices that could be considered discriminatory, Monkhouse notes.
In a 2018 dispute over pay equality, for example, the Canadian Union of Postal Workers argued that regional pay differences at Canada Post had resulted in rural carriers — most of whom are women — being substantially underpaid compared to their majority-male urban co-workers.
And the switch to remote work, combined with location-based pay, could create new and stronger incentives for employers to hire workers in cheaper jurisdictions outside Canada, according to Venditti.
“There’s a lot of outsourcing that’s already going on,” she says.
“I think this is just going to make that stronger.”