I don't really care about "fairness", it's more that the process seems to be so convoluted that I imagine a ton of people just not bothering.
The application process for GitLab, for me, seems to be:
1) figure out the highest paying area I have access to (visa or whatever)
2a) actually move there if I have to or it happens to be where I am, or 2b) get a postbox or rent a studio apartment pointlessly
3) actually apply for the job and potentially get it
4) if at any point I want to move, figure out how to do it without anyone finding out because otherwise I effectively lose my job (the UK salaries outside of London are comedic)
(as an aside I'm not convinced this "your rate will be reduced" stuff is even legal, I imagine it'd be considered constructive dismissal)
Contrast that with an on-premises job (you can move, the commute length is your own problem) or a real remote job (completely unrestricted).
Again, it seems to be working for them, but it looks really odd from my perspective.