Halfway house? Hybrid working heightens discrimination risk for employers

When the government’s advice to work from home was withdrawn on 19 July, many employers rushed to announce that they were embracing a hybrid working model. Their message was about embracing flexibility, enabled by effective technology and enjoying the mutual benefits of saved costs and time.

There were a minority of contrarians. Goldman Sachs, for one, was vocal in its desire to see all staff back to pre-covid-19 working patterns in its offices. The media largely portrayed this as the dinosaurs versus the progressives, but the adoption of the hybrid model owed a lot to economic self-interest.

At the start of lockdown in 2020, I remember pondering, “How long will it take employers to work out they don’t need to pay people London rates if no one is commuting in”? By summer 2021 I had my answer, as it was reported that Google might cut the pay of employees in the USA who opt to work from home permanently. Around the same time, the UK government was forced into a hasty retreat from the suggestion that civil servants who remained working from home may suffer a pay cut.

Going the distance

Paying those working from home less is not an idea that is going away. Housing, travel and living expenses within a sensible commute from London mean that employers have, until now, had to pay more to entice workers to the capital every day. But this looks set to change, if flexible working really is here to stay. If you can buy a house in a cheaper area of the country and hardly ever need to travel to London (or other large urban centre), pay rates which are linked to geography become meaningless.

The question is: will employers be willing to gamble on staff accepting less? If we really are entering a severe labour market shortage, then it may be a bet they are not willing to take at this point. However, the potential savings for employers moving to a hybrid or entirely home working model, if they do cut salaries, remains highly attractive.

Problems posed

Cutting pay for existing employees is legally and reputationally risky for employers – it can only be done by agreement. However, reducing rates for new staff doesn’t carry the same risk. Over time it would be possible to drive down average salaries – dependent on the recruitment situation.

This raises legal issues around the formation of a two-tier work force - of those working from home being paid less, and those in the office enjoying higher rates of pay.

And it’s not just pay. Issues around the availability of training, promotion and bonuses are also highly relevant when you have some workers spending all or the majority of their time away from the office. Those who are present, physically in the same space as their boss, will enjoy access, have the spontaneous conversations, learn from chance encounters and be front of mind when decisions about allocation of prestigious work or rewards are being made. This is neatly described by the phrase, ‘present privilege.’

Recent surveys suggest that home working is more appealing to women, which is no surprise as they tend to be the ones with caring responsibilities – and some disabled workers who may find travelling more difficult. While younger workers may want to be in an office environment for cultural and social reasons, a majority of older men (those over 48) also want to be in the office (Carnegie Mellon & PwC Research Q4 2020). This varied picture risks the creation of ‘in’ and ‘out’ tribes – and decades of pursuing equal opportunities for staff could be undone if employers do not handle things very carefully.  

The risk of discrimination and equal pay claims against employers who maintain a hybrid working model is significantly increased. Employers will need to keep a very close eye on their data to understand who is working where, their pay, benefits and promotion and how these change over time. Obvious discrimination risks involve sex, age and disability, but other protected characteristics such as race and sexual orientation should also be considered, depending on the location and circumstances of the workforce.

Katy Meves is an employment law specialist with Springhouse Solicitors: springhouselaw.com