We can separate out what could be two parts to this question:
When it comes to pay rises, I recommend you follow your normal protocol, whether that’s an across the board increase for everyone or varied increases based on performance. Where employees conduct their work should not be a consideration when it comes to the annual pay review. If, for example, you feel that employees are not performing due to their location, then that should be addressed from both the employee and line manager sides as a priority, but as a performance issue not a pay issue.
We also need to consider pay levels in relation to location. We have seen this raised as an issue, both in terms of regional pay levels and more specific location allowances. I’m afraid I don’t think we’ve reached a conclusion here, but we are hearing about some different practices that organisations are taking. Before you do anything, stop and think – about what that additional pay is for, what it is rewarding or covering, and the consequences of removing it. If an employee now has to travel into London two or three days instead of five, their travel costs might not have changed much (for example due to no longer having a season ticket). And they still need to be within commuting distance. Equally, there are increased costs of working from home, so for example we have heard how one organisation is introducing a homeworking allowance, but it cannot be claimed as well as a location allowance. I would say practice here will also be driven by the market – if the loss of an explicit allowance or rolled-up location element in the salary would inhibit your ability to recruit, then you probably need to keep it for at least the time being. Let things settle, see where your employees are working, and then properly assess the right rate for the job.