A pay cut for working from home? Sorry Jeff, but you’re out of touch

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Should work from home employees be paid less? Absolutely not.

Over the last few years, the paradigm of work has undergone significant change as remote work has become increasingly popular. I am the employer of 20-plus people, and I’ve quickly learnt the pros and cons of both remote employees and having a bustling office full of friendly faces.

While paying frontline service workers more is a brilliant idea, this should not be to the detriment of those who work from home.Credit: Dionne Gain

It goes without saying that the ability to work from home is an absolute privilege, with only specific office-based roles being able to enjoy the luxury while our frontline workers (who deserve so much more credit than they currently get) will never get such an opportunity.

This week, former premier of Victoria Jeff Kennett proposed the idea that remote workers should take a pay cut to compensate for those who don’t have the opportunity to work from home. He believes pay cuts are a way to promote productivity and address what he believes is an increasing social divide between those who can and those who are unable to work from home.

While it’s important to acknowledge the rising social divide and open a conversation about compensating frontline workers more adequately, penalising individuals who work from home isn’t the answer.

By assuming working from home is a luxurious choice, we are overlooking the fact that many individuals rely on remote work to access employment opportunities that would have otherwise not been available to them, we are disregarding the significant disadvantages remote workers face in terms of promotions or other career advancement opportunities, and we are not acknowledging the real benefits of creating a better work-life balance for employees.

Kennett suggested that pay cuts were an “appropriate method” considering “Victoria’s financial position” and that those who choose to work from home, regardless of the number of days per week, should have a pay reduction in line with the costs they would have otherwise incurred if they went to the office. He then proposed that the government should increase incomes for those in frontline roles who were unable to work from home, like teachers and nurses.

From someone who never thought they’d happily agree with Jeff Kennett, I do agree that paying frontline service workers more is a brilliant idea – arguably, the best idea he’s ever put forward. However during the current cost of living crisis, this should not be to the detriment of those who work from home.

The concept of penalising employees who work from home because it “saves them money and stress” shows us that Kennett is completely out of touch with the common man. While this may sound controversial, it is a fair representation given his lack of understanding when it comes to the benefits of remote work and the value those employees bring.

From my perspective salaries should be determined based on the value of the work performed, irrespective of the physical location the work is performed from. Imposing lower salaries for people who work from home not only undermines their contributions but also fails to account for the significant advantages that remote work brings to both employees and employers.

One could reasonably argue that Victoria has actually already cut its public sector workers salaries, given that in 2023 it was announced they’re only receiving an annual pay rise of 3 per cent. This pay rise is significantly below inflation, and according to the Consumer Price Index, the cost of our goods and services have increased by 7 per cent, meaning public sector workers aren’t able to purchase as much as they were last year with the same income, so they’re already falling behind.

Work from home options can open many doors for many individuals, and they should be embraced more readily, not just because of the financial benefits to the employee and the employer. It also opens up a wider candidate pool for employers to embrace not only more diverse employees but wider skill sets, and it provides access to those with a disability more opportunity to work from a space that works for them.

Numerous studies have shown a positive correlation between employee engagement and higher shareholder returns. By embracing flexible work arrangements such as remote work, companies can boost employee satisfaction and productivity. This, in turn, contributes to increased shareholder value. It is in the best interests of both employees and employers to consider flexible work options that can enhance engagement, motivation, and overall job satisfaction.

Additionally, employers having employees who work from home brings notable savings for businesses. By reducing office space, companies can save on rent, utilities, and maintenance expenses. Moreover, remote work can lead to increased employee retention, minimising recruitment and training costs.

While Kennett is of the opinion that work from home employees should be taking a pay cut, it’s important to also point out that working from home can result in additional expenses for employees, such as setting up a home office, increased utility bills, or technology requirements. Employers should consider providing support or allowances to alleviate these burdens and ensure employees can effectively fulfil their job responsibilities without undue financial strain.

Data from SEEK showed us that “work from home” was the most popular search term for jobseekers at the end of 2022, proving that in order for employers to attract, retain and engage great talent they need to create more inclusive and flexible work environments that benefits everyone involved.

To negotiate better work from home benefits, employees can consider advocating for clear remote work policies, establishing open lines of communication with their managers, and showcasing their productivity and achievements while working remotely.

Thankfully, we don’t have to worry too much because Kennett is no longer Victoria’s premier and the current Andrews government has stated that “the government will not be taking advice from Jeff Kennett, whose Liberal government closed hospitals and schools and sacked teachers and nurses”.

As an employer who’s seen significant benefits to implementing work from home options for my teams, I won’t be adopting his opinion, and I’m sure any reasonable other employer won’t either.

Victoria Devine is an award-winning retired financial adviser, best-selling author, and host of Australia’s number one finance podcast, She’s on the Money. Victoria is also the founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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