Introduction to this document

Pay variation on change of workplace clause

If you may need to implement a pay reduction should an employee permanently transfer to an alternative workplace location, you can use our clause to give you the contractual right to implement that pay reduction.

Geographical pay variation

Where you have several UK workplaces, it may be that you pay higher rates of pay at some of those locations than others. Sometimes this is recompense for the time and expense involved in commuting into a major city such as London or Manchester and it’s essentially higher pay than the employee would get if they worked in a smaller town outside the city. Sometimes, pay is based on where the workplace is geographically in the UK and the relative cost of living there – for example, it costs more to live in the South East than it does in the North East of England. Where an employee then permanently transfers from one workplace location to another, whether at their own request or pursuant to a mobility and relocation clause in their employment contract, it might mean that their pay needs to be adjusted either upwards or downwards. Whilst a pay increase isn’t going to result in any objection from the affected employee, you can’t decrease pay unless either you have their express consent to this (obtained in writing) or the pay reduction is authorised by their employment contract.

Pay reduction

A widely-drafted contractual clause entitling you to decrease pay at any time would generally be unacceptable to employees (and is subject to the implied term of mutual trust and confidence) and so isn’t found in most employment contracts. However, if your pay rates vary depending on workplace location, it would be reasonable to include a clause enabling you to implement a pay reduction, dependent on location, should an employee be permanently transferred from one workplace to another. So, this is the purpose of our Pay Variation on Change of Workplace Clause. Without it, you’ll need to obtain the employee’s express consent to the pay reduction at the time of their transfer.

Clause contents

Our clause gives you the contractual power to automatically adjust the employee’s pay rate, either upwards or downwards, should they permanently transfer to another location which becomes their new normal place of work, so that they are to be paid the current rate for their job at that location. This applies whether the transfer is at the employee’s own request or at your request or behest. Our clause also makes clear that the reason for this is because there are variations in pay for the job depending on location, i.e. you have legitimate business reasons for the clause.