Canadian HR Reporter

August 2020 CAN

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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N E W S 12 www.hrreporter.com Facebook warns of pay cuts for employees working from home Pay differentials based on location are common, but it's unclear how that will work with the surge in remote work, says Sarah Dobson, in looking at Facebook's recent announcement that employees working from home could face a cut in pay "Certainly, location and cost of living, they go hand in hand. And we do find that there are variances based on location. So, it does lead you to think that potentially as companies are more and more flexible in terms of where individuals live and the idea of working remotely or virtually, I wouldn't be surprised if companies start looking at compensation based on that." Looking at some of the larger more expensive cities such as Toronto or Vancouver, it's likely that salaries would be higher there to attract top talent compared to smaller locations where employment opportunities aren't as strong and the cost of living isn't as high, she says. Most organizations with workers around the country pay a differential depending on the cost of living in various locations, says Gail Evans, president of the Wynford Group in Calgary. "You have to determine how much you have to bump up the pay in order to keep the person whole in a different location. But it is quite complicated because you would have to look at not only the price of homes but taxes and transportation and all sorts of different things. So, So, we're going to continue that principle so that means if you live in a location where the cost of hiring is dramatically lower or the cost of labour is lower, then salaries do tend to be somewhat lower in those places, even though with a somewhat lower salary, you can often still have a better quality of life than you'd have in some of the big cities." Facebook provided a grace period through the initial months of the COVID-19 pandemic, said Zuckerberg, but by Jan. 1, the company will need to know where everyone will be working from. "We'll basically adjust salary to your location at that point." The company is relying on the honour code in having people reveal their location, but it could also check VPN locations for confirmation, he said. "There will unfortunately have to be severe ramifications for people who are not honest about this, because this is important for filing taxes correctly. You may be breaking the law if you're not being honest about this." 'Precise' differentials Compensation is made up of a variety of factors including cost of living, the local economy, job growth, demand for certain talent, different business activities and overall employment statistics, says Trina Casey-Myatt, regional manager for Robert Half in Calgary. conceptually, it makes some sense... Let's say they moved from Vancouver to Penticton or something like that; the cost of living is definitely lower in Penticton than it is in Vancouver." But the calculation is not usually as precise as that suggested by the Facebook CEO, she says. "He's sounding like he wants to really fine-tune it so that, if you move from one address to another, they'll have an algorithm that determines what the differential in cost is." If you're a global company, you're probably going to do things, at a minimum, by country and possibly within regions of a country, says Claudine Kapel, principal of Kapel and Associates in Toronto. "In Canada, some organizations have national pay lines, but they might have regional differentials for certain regions of Canada if it makes sense for them to do that." However, the emphasis on regional differentials has diminished in recent years, she says. "If you look, for example, at the Greater Toronto Area, 20 years ago, you might have seen regional differentials between, say, Toronto "If companies are going to take this step, it's about making sure individuals are well aware of what the process looks like." Trina Casey-Myatt, Robert Half AS a part of a major push for more employees working remotely, Facebook raised eyebrows recently when CEO Mark Zuckerberg revealed the change could also lead to pay cuts. Why? Their location. "If you live in a location where the cost of living is dramatically lower or the cost of labour is lower, then salaries do tend to be somewhat lower in those places," he said in a videoconference call to employees in May. "Basically, we pay market rates, we pay very well… and that varies by location. REDUCED PAY OK FOR REMOTE WORK 44% would accept the pay cut 32% would look for another job 24% would keep going to the office Source: Jeremiah Owyang If a company offers employees the ability to work from home indefinitely, with a 10-per-cent reduction in pay:

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