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New data from XpertHR finds that UK companies are uncertain about how location pay will be impacted by the pandemic.
Location pay is commonly provided as an allowance for employees working in London on top of standard pay. For instance, those working in inner London receive a median location payment of £3,775 ($5,045) while outer London workers receive £3,250 ($4,343).
The research shows that 44% of UK organizations were “unsure” about how hybrid working will alter location pay, which is currently offered by 55% of UK organizations.
The data reveals that 69% of employers would compensate workers who live in expensive areas, with 66% saying this helps keep salaries competitive. Although many companies have shifted to remote or hybrid work arrangements, 79% of organizations said they have no plans to change their current pay model.
Eighty-six percent of organizations said that location pay is critical for their business needs, but alterations as a result of new workplace policies have left some uncertain.
“Remote working is here to stay, and because of its role in recruitment and retention of staff, so too is location pay,” said Sheila Attwood, pay and reward editor at XpertHR. “With some employees no longer operating from the high-cost areas that originally qualified them for a location allowance, employers need to choose how to best adapt their offerings to reflect the current pandemic-influenced labour market.”
Attwood added that the key to ensuring any changes in pay policy runs smoothly is to be transparent and consistent with employees, explaining why they may see an adjustment in the future.
Perhaps even better, leaders should ensure that employees are able to actively voice their concerns about potential reductions in location pay and address how to make the workplace as equitable as possible.
