Location-based pay is the newest conflict between workers and employers, as remote Googlers face a 25% salary cut

• Employers are mulling pay cuts for remote workers with reduced living costs.
• Google, Facebook, and UK government departments have all suggested cutting pay for remote workers.
• But with a labor shortage and more workers willing to change jobs, it's not clear many firms will really risk it.

Workers who permanently choose not to commute into the office face a new sting: A pay cut from employers who argue their living costs are lower.

This latest conflict comes after white-collar workers took on employers over returning to the office and (mostly) won, and as employers gear up to mandate vaccines for returning workers.

The pay debate centers on whether those no longer commuting into city centers or other expensive hubs deserve to receive their current wages.

On Wednesday, news emerged that Google employees who work remotely full-time might face a salary haircut of as much as 25%.

And Facebook CEO Mark Zuckerberg has indicated that employees looking to "flee to lower-cost cities" could expect to have their compensation adjusted.

In the UK, The Guardian reported that several government departments were mulling whether to remove an approximately £4,000 ($5,500) top-up for civil servants who live in London and faced higher living costs.

The news came the same week UK chancellor of the exchequer Rishi Sunak said working from home could hurt the career of younger workers.

The FDA Union, which represents the UK's civil servants, said the "insulting and cowardly attacks" had caused anger, and underappreciated the roles played by its members - 81% of whom already live and work outside of London.

Is this really the start of a new battle between firms and staff?

There are two sides to every story, and each argument holds its merits.

Companies such as Google and Facebook have invested vast sums in large, fancy campuses and want to see a return on their investment by having employees in the building.

It's also not uncommon for companies to vary pay, with 49% of UK employers already determining salaries by location, according to the Chartered Institute of Professional Development (CIPD).

But workers argue that they shouldn't be penalized for cutting their living costs, and that their employers may make savings in the long term.

It isn't clear how many businesses will risk the fight right now.

More workers are open to reassessing their careers and purpose than ever. During a tight labor market, employers attempting to reassess pay could drive away talent.

Given that it's still early in the days of hybrid work, it would be a rash action to take right now, a CIPD spokeswoman told Insider.

It could also lead to "an employment law minefield for businesses", said Malcolm Gregory, employment lawyer and partner at UK firm Royds Withy King.

"If they want all staff to work from an office, they may face an increase in formal requests to work from home that cannot be ignored. If they offer fully remote working and wish to reduce salaries, they will need to gain consent. That may not always be given."

British staff with protected characteristics under UK employment law - such as age, disability, and pregnancy - who find it difficult to commute could be able to bring claims against their employer.

However Gregory added that US workers could face more aggressive workforce strategies from their employers, due to the fact that most employment is at will.

Legal or HR headaches may be why few companies have cut pay so far.

Neither Google, nor Facebook have actually cut workers' pay. And a spokesperson for UK prime minister Boris Johnson said civil servants would not be punished for continuing to work remotely.

According to CIPD data, just 7% of companies are changing pay to reflect home working or have plans to.

In reality, decisions around pay and location will vary between sectors and businesses - but it will stay a point of public discussion for the foreseeable future.