Location-based pay means an employer sets a remote worker’s salary according to where that person lives or works. Location-agnostic pay means the same role earns the same rate wherever you are. Many remote jobs use something in between, so the label on a listing rarely tells you what you will actually be paid. This guide explains the models, how common each is, and what to ask before you accept an offer.
TL;DR
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Location-based pay adjusts salary to a geographic labor market. Location-agnostic pay does not, and pay zones sit between the two.
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In a March 2025 Mercer survey, about 40% of employers allowing full-time remote work paid by the employee’s home-location market rate. About 25% used the primary office location and 16% used national rates.
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“Location” can mean cost of living or cost of labor, and the two produce different salaries.
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Moving can change your pay, your taxes and your legal protections. Check all three before you relocate.
What location-based pay means
SHRM’s explainer on location-based pay describes it as compensation adjusted to the employee’s geographic labor market, using location, market rates and the employer’s own pay philosophy. It names two neighboring models:
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Location-agnostic pay: the same role is paid at the same rate regardless of where the employee lives.
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Pay zones: locations are grouped into broader bands, so everyone in a zone is paid within the same range.
The trade-off differs for each side. An employee who moves to a lower-paid market may earn less. An employer gains access to more talent at locally competitive rates, but takes on more administration.
How common is each model?
The Mercer survey is the clearest recent snapshot of US employers. Among those allowing full-time remote work, roughly:
| Pay reference point | Share of employers |
|---|---|
| Employee’s home-location market rate | 40% |
| Primary office location’s market rate | 25% |
| National rates | 16% |
The same survey found that 56% of respondents’ companies operated in countries outside the United States, while only 20% reported a global pay-transparency strategy. For a candidate, that gap matters: many employers hire across borders without a published, consistent way of explaining pay.
Cost of living or cost of labor?
The phrase “location-based” hides a second question. Some employers adjust for what it costs the worker to live somewhere. Others benchmark what employers pay for the same job in that local market. The two can diverge sharply. A city may be expensive to live in but have modest salaries for your role, or the reverse.
Most employers benchmark the local market rate rather than reimburse your actual expenses. So a high rent will not necessarily raise your offer, and a low rent will not necessarily lower it. Ask which method the company uses.
A worked example: how one global employer does it
Remote, an employer-of-record company, published its compensation methodology in February 2025. It sets a salary baseline at the 65th market percentile, applies geographic pay differentials, checks internal equity, and reviews pay twice a year. It also builds country-specific mandatory items, such as Mexico’s 13th-month pay and the Netherlands’ 8% holiday bonus, into its country benchmarks rather than adding them on top of base pay.
This is one company’s geo-range model, not a market standard. Its value for you is the list of categories. When an employer will not share a full salary table, you can ask about each one: benchmark percentile, geographic zone, review cycle and statutory extras.
Why many employers choose pay zones
Adriana Roche, chief people officer at MURAL, told SHRM that her company rejected both identical global pay and exact location-based pay, and chose broad pay zones as a practical compromise. She also cautioned that zones are imprecise: they can sit above or below the local market, and scarce, high-value hires may need exceptions.
For you, this means a zone-based offer is often negotiable at the edges. If your skills are hard to find, a higher offer within or above the zone is a reasonable request. The wider question of how employers keep distributed teams motivated is covered in this piece on engaging remote and hybrid teams, which is written in Spanish.
“Work from anywhere” does not mean equal pay
Academic research on remote platform work shows how uneven pay can be. A study of the global polarisation of remote work found that workers in capital regions earned 24% more per hour than workers in other regions in OECD+ countries, and 53% more in Global South countries. Infrastructure, skills and local labor-market institutions can matter as much as living costs.
So even with no formal location rule, geography can shape what you earn. A genuinely location-agnostic employer is rarer than the phrase suggests, which is why it pays to verify the policy rather than assume it.
Pay is only part of what location changes
There is no single worldwide rule on whether a remote employee’s pay or tax treatment follows the employer’s address, the employee’s home or the place where the work is done. Official guidance shows how conditional this is:
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Finland’s cross-border commuter rule applies only when specified border-residence and border-work conditions are met.
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Italy states that smart-working arrangements do not by themselves change the criteria for determining taxation.
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Taiwan’s tax authority says services physically performed in Taiwan can create Taiwan-source salary income, even when the employer and bank account are abroad.
Legal protections can follow location too. New Jersey’s May 2024 enforcement guidance says its anti-discrimination law can protect employees who work remotely outside the state and expressly covers compensation. That is a jurisdiction-specific example, not a global rule. Pay differences should rest on documented job, market or legal criteria, and you should check the law that applies to both the employer and your work location.
For the practical side, see our guides on working remotely abroad and the legal requirements for working remotely for a US company from abroad.
Questions to ask before you accept
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Is pay set by cost of living, local market rate, pay zone or a single global band?
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Which zone or benchmark applies to the place I plan to live, and what percentile is it?
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Will my pay change if I move, and how often is it reviewed?
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Are mandatory local benefits, such as statutory bonuses, included in the number you quoted?
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Am I employed through a local entity, an employer of record or as a contractor?
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Is the company allowed to have me work from the country I intend to live in?
A company that can answer these clearly is usually one that has thought through remote hiring. Vague answers are a signal to slow down. Our guide on why employers restrict where remote employees work explains the reasons behind those limits.
FAQ
Is location-based pay legal?
In general, employers may set pay by market and location, provided the differences rest on documented job, market or legal criteria and not protected characteristics. Rules vary by jurisdiction. For example, New Jersey’s guidance treats discrimination in compensation as prohibited even for remote workers outside the state. For a specific situation, consult an employment lawyer in the relevant country or state.
What is location-agnostic pay?
It means the same role and level earns the same pay wherever the employee lives. Check whether a company’s policy is truly worldwide or applies only within one country, because the label is often used loosely.
Will my salary drop if I move?
It can. Under location-based pay, moving to a lower-paid market may reduce your salary, as SHRM notes. Under a pay-zone or location-agnostic model it may not. Ask in writing before you move, and confirm that your employer permits work from that country.
Can I negotiate a location-based offer?
Often yes. Pay zones are approximate, and employers sometimes make exceptions for scarce skills. Ask which benchmark and percentile the offer uses, then compare it with market data for your role.