Companies are dealing with a unique set of circumstances due to the proliferation of remote work necessitated by the pandemic.
As more employees are allowed or even required to work remotely instead of reporting to the office, many are taking advantage of the opportunity to relocate to areas with lower costs of living. Also because of the growth of remote work, companies are recruiting remote employees from geographic locations outside of their immediate area, which may be less expensive places to live.
This has inevitably led organizations to question their pay scales; specifically, whether or not employee compensation should be based on the living expenses in the employees’ physical location.
“To adjust pay, or not to adjust pay? That is the question employers are asking as they rethink their compensation strategies in response to the new era of remote work,” writes Karen Gilchrist, CNBC International’s Make It reporter for Asia Pacific
There is no simple or universal answer to this question. “Different companies differ on whether to change the pay of employees who transition to remote work,” says technology writer Mike Elgan.
How companies approach the issue depends on their needs, resources, and ethics. That’s why, before adopting a location-based