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David Roath | 9th May 2022

Home working and hybrid working : pay adjustments


David Roath | 9th May 2022

Home working and hybrid working : pay adjustments

Stephenson Harwood (SH) is an international law firm and its UK office is in London. Like many employers, it has been formulating a policy on post-pandemic working and grappling with the issue of how to be a flexible employer whilst at the same time utilise office space and best deploy experienced legal staff. It has been reported that SH had announced a hybrid and home working policy as follows:

  • Full-time employees will be required to attend the office at least 60% of the time, equivalent to three days a week (the Hybrid Option).
  • Employees can instead opt for full-time home working (the Home Working Option).

This is all fairly straightforward so far. However, there is a sting in the tail and this is that, if you opt for the Home Working Option, your pay will be 20% lower than if you opt for the Hybrid Option. The headlines are that this is a pay cut but this is not strictly accurate. What SH is doing is offering a variation in contractual terms and the position is likely to be as follows:

  • Employees will have a contractual place of work and this will be the office. Strictly therefore, the employees are obliged to attend the office for 5 days.
  • Employees can vary this to the Hybrid Option and have a balance between home and office working, with no impact on pay.
  • Employees can choose to adopt the Home Working Option in the knowledge that this will reduce their pay by 20%.

Employees do therefore have a choice in this and it’s not the same as a unilateral change in pay or terms, such as some of the fire and re-hire cases that have been in the news.

It’s fair to say the reaction to SH’s policy on social media has not been positive at all with only a few people commenting that it seems fair to give employees the choice between the Hybrid Option and the Home Working Option. The vast majority of comments I have read are negative about SH and suggest that the policy is unfair or unlawful. I comment on this below.

Leaving aside the legalities, is this a reasonable way to proceed for SH? I would be interested to hear people’s views on this. I think there are numerous competing issues including:

  • People have got used to working from home some or all of the time. For some, the benefits outweigh the detriments and they want to keep hold of this way of working for as long as possible or forever. Employees who support full-time home working enjoy the time and money saved and the flexibility this brings in terms of family and personal arrangements.
  • Many employers, on the other hand, feel that there is a value in bringing people together and this that cannot be replicated remotely, such as through video meetings.

If we take the law as an example, I have no doubt at all that there are benefits of lawyers working together in the office. As a junior lawyer learning my trade (many years ago) I learned from working alongside senior lawyers, sitting in their rooms, watching and listening, discussing cases and legal issues and joining meetings at short notice. A lot of this was learning by osmosis and this cannot be replicated at home.

For senior lawyers, working from home is easy. For trainees and junior lawyers, the pandemic has meant that there is a gap in their training which needs to be filled. This gap will be filled by interaction as we go forwards. For me, hybrid working where employees will mix office and home working is the perfect option, as long as junior employees have the chance to attend the office more often if they wish or need to as part of their learning and development.

Turning back to SH and the question of whether the new policy is lawful? An angle of attack could be that it is indirectly discriminatory. SH are introducing a practice which, whilst on the face of it neutral (applying equally to all), may put people with a protected characteristic at a disadvantage. The obvious example here would be women and it may be argued that the policy disadvantages women because more women have caring responsibilities and thus will need to choose the Home Working Option.

A practice which disadvantages people with a protected characteristic will not be discriminatory if the employer can justify it. The test for justification is that the employer must have a legitimate aim (or aims) and must deploy proportionate means to achieve the aim(s). The employer’s aims might include rewarding and compensating attendance at the office if the employer also considers that attendance at the office has business advantages (such as staff interaction, training and development).

The test of proportionality requires the employment tribunal to carry out a balancing exercise to assess whether the business aims relied on are sufficient to outweigh the detrimental impact on the protected group and the claimant.

In this case, I suspect SH would say there is no disadvantage in the first place because employees can opt for the Hybrid Model but it could be subject to challenge in the right circumstances. The focus would then be on the balancing exercise and this is always difficult to predict. Employment tribunals (like all courts) are unpredictable places and different employment tribunals would reach different conclusions.

I am sure the SH policy will be food for thought for other employers but I don’t expect to see many others issuing a similar policy. I think most office based employers will adopt a hybrid system which will mix office and home working with minimum office attendance requirements, but will then deal with individual requests for more flexibility on a case by case basis (using an informal or formal flexible working application procedure). This model will avoid the kind of backlash that SH is facing.

For employers, please visit our Employment Law web page and for employees visit our Employment Law Advice page to see the types of issues we can help you with.

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