In the US, Google, Facebook and Twitter have introduced variable pay for teleworkers based on their location. Their salary is indexed to the cost of living according to the territory. Can this practice be applied in France?
In the US, Google, Facebook and Twitter have introduced variable pay for teleworkers based on their location. Their salary is indexed to the cost of living according to the territory. Can this practice be applied in France?
In France, salaries differ according to geography and are on average lower in the provinces than in the Paris region. There are disparities according to the cost of living on the territory: according to INSEE in 2017, the average net monthly salary of executives was more than 4,700 euros for a Parisian. It amounted to 3,500 euros for an executive working in the Bouches-du-Rhône. At the bottom of the ranking was Lozère with an average net monthly salary of around 2,600 euros per executive.
In the public sector, civil servants receive the same salary wherever they work but receive a residence allowance that varies according to their geographical area.
What are the risks for the company if it practices pay differentials according to the telework location?
In practice, the company can pay two employees in the same position differently. The risk is that the pay policy is discriminatory. If the company can demonstrate that it is acting according to objective and non-discriminatory criteria, such as the difference in the cost of living according to the territory - which is an objective criterion - then paying different salaries depending on the employee's place of work will be legally valid.
This is how the issue of wage differentiation according to the place of telework should be addressed, the legal risk being mainly that of discrimination.
According to the Labour Code, the employer is forbidden to take into consideration different criteria when dealing with an employee - recruitment, promotion, remuneration - in particular his or her origin, gender, age, sexual orientation but also his or her place of residence, the law says. Lowering pay according to this criterion would therefore be discriminatory according to the Labour Code.
However, in 2016, the Court of Cassation ruled that an employer's decision to unilaterally apply a difference of treatment in terms of pay was valid. This wage policy was the result of a disparity in the cost of living according to the geographical location of the employees: Renault applied different pay scales to workers in the Paris region and in the provinces. " The Court of Cassation therefore accepted a derogation from the principle of equal pay for equal work, based on an objective criterion relating to the cost of living in the country," explains employment law lawyer Claire Daly. The court therefore validated the decision of the car manufacturer to differentiate the salaries of its employees according to their place of residence.
The employer cannot lower the pay of existing employees but is able to apply this pay policy to new employees.
The health crisis has generated many departures from Paris to the provinces and medium-sized cities such as Bordeaux and Nantes. And one out of two Parisians is considering leaving the capital to gain comfort and quality of life. So what salary policy could be put in place for these teleworkers?
According to Claire Daly, "the employer cannot change the remuneration of employees without their agreement, as it is an essential element of the employment contract. It is therefore more appropriate to talk about a wage policy for new employees and not about a wage adjustment. So what can be the wage policy for these newcomers, at a time when telework has become a real recruitment criterion?
"It seems to me that the reasoning that presided over the solution found in 2016 is applicable by analogy to the remuneration of employees who telework," says Claire Daly. "The disparities in the cost of living on the territory concern them as much as employees who do not telework. However, employees should not fear that their pay will be lowered when they take up a teleworking position, because in practice, the salary is the result of a negotiation between the employer and the employee. "The unilateral commitment is not the preferred way to implement a policy of wage differentiation in the territory. Whether it is a question of pay or teleworking conditions, negotiation should be the preferred method".
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