What is location agnostic pay?

Location-agnostic pay refers to a payment model in which companies compensate workers at the same rate for the same job, regardless of where those workers are located. It is different from location-based pay, in which salary and benefits are adjusted according to each worker's geographic location.

What is a location-agnostic pay model?

So, what exactly is a location-agnostic pay model? It's when companies pay the same salary for the same role, regardless of where employees live—whether that's New York or New Delhi. Unlike location-based pay that adjusts for local costs, this model keeps compensation uniform across all locations.

For example, a company with a location-agnostic pay model across the United States will compensate employees the same in all 50 states, regardless of which one they call home. In a worldwide model, the same principle applies—but employees can live in any country in the world and be remunerated equally for doing the same job.

This is a fairly new concept and a departure from typical location-based pay models. Traditional models adjust salaries based on local market conditions.

The traditional thinking? Companies need to pay more in expensive cities to attract top talent.

What are the employment laws in Argentina? India? Denmark? Find answers in our hiring guides!.

Pros and cons of location-agnostic pay

Thinking about switching to location-agnostic pay? It's a big decision that comes with clear trade-offs.

Potential benefits include:

• Wider talent pool: By offering a single, competitive salary, you can attract top candidates from anywhere in the world, not just high-cost areas. Research suggests more than 20 percent of the workforce could work remotely with no loss in effectiveness, vastly expanding the available talent pool.

• Improved equity and transparency: Paying for the role, not the location, can reduce pay gaps and foster a culture of fairness. For instance, data shows that the rise in remote work played a small but statistically significant role in reducing gender wage inequality in 2021.

• Simplified administration: A single pay scale can make payroll and compensation planning simpler than managing dozens of localized pay bands.

On the other hand, some challenges to consider are:

• Higher costs: Benchmarking salaries to a high-cost market can significantly increase overall payroll expenses.

• Perceived unfairness: Employees in low-cost-of-living areas may have significantly more disposable income than their colleagues in expensive cities, which can create cultural friction. This is compounded by data showing that in 2021, remote workers on average earned 13.3 percent more than their on-site counterparts, potentially amplifying disparities based on geography.

• Recruiting difficulties in top markets: A single salary might not be competitive enough to attract talent in expensive global hubs like San Francisco or Zurich. However, this may be offset by the fact that many employees value the option to work from home a few days a week at an equivalent of 5% of their pay.

Companies offering location-agnostic pay

Some companies are already using location-agnostic pay models, at least partially. Businesses that have jumped on board include Airteam, Basecamp, Expensify, Harvest, Know Your Team, and Toggl. 

But compensation strategies aren't one-size-fits-all. Even though more companies are choosing location-agnostic pay, it might not be right for you. If you're considering it, you should consider factors like:

• Where your workforce is located

• If your leadership team would be on board

• Whether you have the infrastructure to equitably implement location-agnostic pay in all areas where you hire

Why location-agnostic pay is gaining ground

Location-agnostic pay models are gaining ground as more companies embrace remote work. This trend doesn't seem to be slowing down; in 2021, the percentage of primarily remote jobs jumped dramatically to 17.9 percent, a sharp increase from 5.7 percent in 2019. However, this hasn't always been the case.

In the past, some companies used geographic differences to justify pay disparities. As remote work became the norm, particularly during the COVID-19 pandemic, many companies first planned to adjust salaries according to workers' locations.

Back in 2021, big tech firms—including Apple, Meta, Microsoft, Alphabet, and Amazon—announced that employees who relocated outside of pricy Silicon Valley would face pay cuts. The logic? Living costs in Silicon Valley far exceeded other areas.

But here's the thing—location-agnostic pay models raise their own fairness questions. Is it equitable when someone in Mumbai has vastly different purchasing power than their colleague in Manhattan, even with identical salaries?

Legal considerations of location-agnostic pay models

Remote hiring is quickly becoming the norm as companies tap global talent pools. But here's what many don't realize—international location-agnostic pay comes with serious compliance considerations.

Each country has different requirements for:

• Minimum wages: Your location-agnostic salary must meet local minimums

• Benefits: Vacation days, social security, and health insurance vary by location

• Tax obligations: Employer contributions and withholdings differ globally

Miss these requirements, and you're looking at serious legal trouble. Learn more about compliance to understand what's at stake.

Don't stress: Oyster is here to help. Oyster is a global employment platform that helps companies hire globally, ensuring that employees are taken care of wherever they may be.

We help companies fairly hire and manage employees in more than 180 countries around the world. You can recruit globally with confidence, knowing you have us at your back.

Building a fair global compensation strategy

Choosing a compensation model is a foundational decision for any global company. Location-agnostic pay offers a powerful path toward equity and simplicity, but it requires careful financial planning and a strong commitment to fairness. The right approach depends on your company's culture, budget, and growth strategy.

No matter which model you choose, building a distributed team requires a partner who can handle the complexities of global payroll, benefits, and compliance. Oyster's global employment platform gives you the tools and expertise to pay your team accurately and fairly, wherever they are. Start hiring globally and build the team you've always wanted.

FAQs

Is location-agnostic pay fair to employees?

It depends—this model values the work over location, but can create lifestyle disparities between high and low-cost areas. Fairness ultimately comes down to transparent, consistent application.

What is an example of location-agnostic pay in practice?

Simple: A Senior Product Manager earns $180,000 whether they live in Omaha or Manhattan—same role, same pay, regardless of location.

How do you determine pay rates in a location-agnostic model?

Most companies benchmark against high-cost markets like San Francisco or use blended averages from top-tier cities. The key is picking one method and applying it consistently across all roles.