Will fully remote workers for London companies be paid local rates at some point?

[Indigoo03]

For those execs or managers on charge of policy or recruitment? Would you necessarily pay a London wage to someone living in a lower cost of living region? I think where this could happen is for new recruits.

People say you pay for the skills so where someone lives should not matter.....

Very interesting question. Lose their London living allowances you mean?
Does that even exist outside the public sector any more? Contractual employment is deep.
It's a good question OP.

Yes, I would expect workers who have had London Weighting to lose that element if they've moved out of the London catchment.

I know people who have lost London weighting proportionally to their wfh schedule. It makes sense, no point paying London weighting to employees not in london!

It likely depends on the role/industry

How far do you need to be to be deemed outside of London? Prior roles pre covid I had colleagues from as far as York whom managed to get 3 days in office 2 days WFH. I think new joiners will be the ones that get their salaries "adjusted" to reflect remote working

To clarify I mean London weighting

I think it's also complicated by plenty of places outside of London being more expensive to buy in. Remote working also benefits the employer, cheaper offices etc

Yes I know of London ppl who have lost London weighting proportional to days WFH regardless of where they live (still in London). Another one would have lost it if they did not come to the office for at least 50% of their days/time. So you'll probably find most employers now have some rule like that.

We're public sector and keeping our London weighting even though few of us have to go to the office very often, if at all.

Bearing in mind my salary is at least £15k less than it would be in the private sector, I think it's fair enough.

My DP's company threaten to remove it for those refusing to come back too the office (job wasn't working well being done at home) miraculously all those who had worked at home for nearly 2 years reappeared.

I work in financial services and what I've found is wages in the 'regional' offices are going up to match the London office wages. I'm still talking the bigger cities but it's a win for anyone wanting to move jobs outside of London!

My DH's employer has already had to threaten this. They employ staff in their London head office from all over the world, and during lock down told them they were free to return and work from their home countries.

Somewhat understandably, they are now reluctant to come back, so they've been told that if they wish to remain in their home country, they will be paid at the local rate - which in all cases is much lower.

Contractual “place of work” will be a factor too though?
if it’s still specified as London then they will
bw expected to pay their own communing costs, and work to London hours etc. Also An argument for Why should they be paid differently if that’s the case?

Yes I’ve seen my old employer start to do this in their regional offices. This is also important where working lines are very blurred around regional / national / London / international work

Most companies I know have given people the option, be a full time home worker and lose your allowance or if you want to retain your London weighting you need to be in the office two or three days per week. Where those people live is irrelevant if they are prepared and able to commute for those days and they cover their own train fare as it’s regular travel to normal place of work.

I think if they're expected to go to an office in London regularly they shouldn't lose it. They'll either be paying to live in London or paying to commute. The train from where I live to London is £46.90 return today (a 45 minute journey). If I were going once a week for just 45 weeks that's £2,110.

If they weren't expected to go at all or only a few times a year then I'd understand the weighting being removed.

Within the company I work for, pay brackets are set according to cost of labour. These vary by country, region, states etc.

In the UK there are two rates, one for employees linked to an office within the M25 and another for those outside of this area or fully WFH.

I am within London, so my pay is set according to the bracket for London. If I wanted to relocate to, for example, our Manchester office, my pay would be reviewed and likely changed.

I say likely changed as there are overlaps between the brackets and depending where you sit, if a performance increase was due etc., that can affect the decision.

If the company approves a relocation from outside London to a London based office, pay is reviewed the other way too and an increase is normally seen. Our company is normally quite happy to support a relocation, whether between offices or moving to fully WFH, unless a function is physically tied to a specific location.

I think this type of model makes sense, and reflects the wages various roles attract in different geographical locations.

A company can’t just ‘adjust’ an existing employee’s salary without consultation and agreement, that’s contractual variance.

True London weighting — where it is a specific, separate figure — is generally applied to jobs where people have never, generally, been able to work from home: teachers, police, firefighters, some civil servants. Mostly public sector.

For everyone else, it’s simply a higher salary that is offered or negotiated.

DH works in this field; the short answer is ‘it’s complicated’. While it would be shady — and potentially actionable — for a company to reduce someone’s salary based on their personal circumstances changing, some companies are looking to pay less for remote workers if someone on a higher salary leaves and needs to be replaced, for example.

But, to be honest, it’s mostly about the person and their perceived value to the organisation; if someone is seen to be worth X, and they ask for X and can back up their position, they get offered X.

Where they live has little to do with it, unless distance becomes an issue directly impacting performance and team coherence, which is an emerging issue.

Yes. There is in fact a law firm which has already offered wfh for its London employees on a 20% salary reduction.

metro.co.uk/2022/05/02/london-law-firm-staff-can-work-from-home-in-return-for-20-pay-cut-16570405/