Charles Cotton, senior adviser for performance and reward at the CIPD, queries if employees should be taxed for working from home.
A report from Deutsche Bank proposes making UK employees pay a five percent tax for each day they choose to work remotely. The money raised by this tax (estimated at around £7bn) could then be used to fund subsidies for lower-paid workers who are not able to carry out their jobs from home.
The bank believes that the new tax would not leave the typical worker any worse off because of the savings they are now making in commuting, fewer purchases of office clothing and not buying lunch from takeaways.
However, if would be fair to say that this suggestion has not been universally welcomed. Some critics have pointed out that not all employees are saving money from not having to commute, such as those who cycle or walk to work.
Others point out that while some costs may have fallen away, new ones have been created, such as the requirement to heat and light the new workspace or buy office equipment, such as printer ink or paper.
Indeed, provisional analysis of the CIPD’s 2020 Reward Management Survey shows that only a few employers have introduced (or plan to introduce) a financial allowance for employees working from home. In addition, some organisations have already removed (or in the processes of removing) the premium pay for those who work in London and other expensive UK cities, while others have it under consideration.
The CIPD’s research exploring the impact of COVID-19 on working lives found that while some employees who were working away from their usual place of work reported an improvement in their financial wellbeing, more said that it had gotten worse.
Another issue with the idea of a tax on remote working is that it could put some people off the idea, which could undo some of the positive workplace developments that have come out from the pandemic and the economic lockdowns. For instance, employees can potentially now apply for jobs that are further afield from where they live. This allows them to access career and reward opportunities that they might not have been able to previously.
Similarly, the new ways of remote working have helped to ensure that those with caring responsibilities, as well as those with disabilities, are less likely to be left out of crucial conversations or passed over for such rewards as bonuses and promotions. However, a tax will ensure that a divide remains.
Deutsche Bank does suggest that this tax could be paid by those employers who do not offer their staff a permanent workspace. However, many companies are suffering financially from the impact of the pandemic and may not be able to increase their labour costs by five percent.
While the report rightly highlights a new and growing divide between those individuals who can work remotely and those who cannot (often low-paid manual roles, the CIPD is not convinced that a is the best way of creating a level playing field.
We think a better solution is for people professionals to help their employers review how work is designed and organised to see if those tasks that can be done remotely and whether those that must be done in the workplace can be more equality allocated, such as on a rotation basis.
They should also look at the reward package to see what pay and benefits are offered in roles that can’t be done remotely to see if they can ensure that they remain as appealing as jobs that can be done from elsewhere, such as additional paid leave. In addition, we should also look at non-financial rewards can enhance the appeal of work that must be done on site, such as through recognition awards.
People professionals should now be looking to build back better by not only reviewing the design of work, jobs and the organisations, but also the reward package to ensure that it meets business needs and is fair.