Forced salary reduction

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  • Forced salary reduction
  • richc
    Member

    So does anyone know if in the UK the company you work for can cut your salary? as I work for a US company and they have just announced an across the board permanent 5% pay cut (except for board members who get an effective 0.006% paycut)

    I know they can do this in the US, however I am not sure if this is legal over here, anyone know?

    nb: the company I work for isn’t losing money at the moment, its just they aren’t in double digit growth at the moment so they want to save some money.

    clubber
    Member

    Don’t think it’s legal here since it’d be a breach of contract (assuming of course that your contract states your salary).

    enfht
    Member

    Yes it can be done

    ridethelakes
    Member

    Any foreign companies operating here have to abide by local laws. Not sure about the legality of it but I would guess that they can do it if they want to. Contracts can be changed usually with one months notice.

    mrmo
    Member

    i think, and i would advise getting proper advice on this, they can, sort of.
    I think it is breach of contract to force you, but most contracts include clauses such as for the good of the company etc. So, they could make your role redundant offer you a job on a new contract and the choice is yours. They could say x redundancies or paycut. Then you get the moral choice of job or paycut? Plenty of ways of doing it.

    In my opinion it is a no win situation, you will loose the money just a matter of how pleasant an experience it is.

    richc
    Member

    The redundancy package here is huge (1 months pay per year (max 12) + 3 months PILON) so they won’t be offering redundancy instead and to change the package is tricky and cannot be done immediately, according to our employee rep (it would take a few months to get the paperwork through the nightmare of Corporate legal).

    Oh yeah the offer is not pay cut or redundancies, its pay cut and redundancies.

    I found this on the web, so it looks like it might have to be voluntary, which if that is the case I should imagine the takeup will be zero, as pension matching is going, pay rises have been canned for the last 2 years and employee benefits have been leeched away over the last few years even though the company has been making industry record profits. Mind you I doubt it helps that last time they did this they used the money saved by the salary cut to fund the pool to make people redundant, so more people got laid off as they had more money to play with.

    According to the legal firm Thompsons Solicitors, an employer cannot unilaterally impose a pay cut. Rakesh Patel, its head of employment rights, explains: “If they did, it would amount to a breach of contract and would also potentially amount to an unlawful deduction of wages under the Employment Rights Act 1996. Deductions may be made only if authorised by a relevant provision in the worker’s employment contract itself or by a statutory provision, or if the worker has agreed in writing to the making of the deduction. In the event of an unlawful deduction, a worker can take the employer to tribunal.”

    I will definitely be giving the CAB a call tho.

    mudshark
    Member

    A few years ago after I left, a previous company I worked for asked everyone to take a pay cut; it was sort of fair as they were mostly paid over the market rate. Many of those that didn’t take it were made redundant in the end.

    Eggbox
    Member

    Also announced where I work today, again a US company….however I believe they need consent to make the cut……we’ll see…

    ads-b
    Member

    My American company is doing the same, but its 10% 🙁

    We are having a lot of redundancies at the moment so there is a solictor in quite often so we asked what the legal stance is. They cant enforce a pay cut, and legalliy it cant be used as a criteria for selection for redundancies if you dont agree to it. But they can sack you anyway, and re hire you on a new contract for less money anyway. So you havent got a choice really.

    TandemJeremy
    Member

    AS the quote above. They cannot change your contract without your consent – and that includes fringe benefits, pensions and so on.

    Even if these things are not stated explicitly in your contract they form part of your contract thru “custom and practice”

    Get proper advice. To me it appears to be a case of an american company not understanding UK law. They can offer you a choice of accept a new contract or face redundancy if they are clever enough to make it legal – in which case you are entitled to the full provisions for redundancy under your contract should you refuse. A choice of redundancy or a pay cut is very likely to be unfair as well.

    Cutting pay is wrong and illegal.

    Premier Icon crazy-legs
    Subscriber

    They can ask you to volunteer for pay cuts.
    They did this at the place I used to work at, a lot of people offered to take anything up to 10% pay cut because it’d help keep some jobs.
    The Board set the precedent by taking a 10% pay cut as well then asking for the workers to do the same “if they felt they could”. To their credit, a lot of people did.

    Premier Icon Teetosugars
    Subscriber

    My mate has just had £10k a year taken off him…

    Apparently they can do this legally as it was at the time of his pay review.

    hes’ not dowing owt wrong, just the line of work is in shite stae.

    mudshark
    Member

    To their credit, a lot of people did.

    Hmmm…I’d feel a bit miffed it I took a cut whilst others didn’t – got to be all or none IMO.

    richc
    Member

    Thanks everyone, feeling is they can ask people to volunteer but not force it. I am going to get some professional advice tho. Company is still very profitable (still made a couple of billion this quarter) just not double digit profits anymore.

    Premier Icon Sandwich
    Subscriber

    HP perhaps?

    Premier Icon aracer
    Subscriber

    But they can sack you anyway

    No they can’t.

    Premier Icon glenh
    Subscriber

    At some point soon, the government will probably force everyone in the UK to take a pay cut, by printing money and devaluing the currency.
    Still, at least that means more people can keep their jobs.

    steve_b77
    Member

    Bentley workers have had a 10% pay cut this year

    Premier Icon aracer
    Subscriber

    devaluing the currency.

    They’ve already done that!

    Premier Icon glenh
    Subscriber

    Devaluing within the UK, not realtive to other currencys.
    If they print more pounds, each pound is worth less. Thus your earnings go down.
    Goods prices will go up such that they are the same in real terms (as cost will be the same).
    It means everyone is less well off, but companies can afford to keep more people in jobs because their wage bill has gone down, and the goods price inflation stimulates people to buy now rather than later, avoiding further stagnation.

    boblo
    Member

    Richc, you don’t work for that large manufacturer of brown sauce do you?

    richc
    Member

    what are the profits like at Bentley? I don’t think people mind taking a cut if the company has fallen on hard times, and it will save jobs however when they are just *cost saving* and still making more money than some countries GDP it grinds a bit.

    edit: I might work for an brown sauce company 😉

    Premier Icon yoshimi
    Subscriber

    I’ve had a 10% paycut recently – legal or not, it happened – still got a job tho 😕

    boblo
    Member

    edit: I might work for an brown sauce company

    Me too, got your email from MH then….

    Premier Icon metalheart
    Subscriber

    we are being offered a 20% cut in pay (and hours supposedly).

    its either that or compulsory redundancies.

    they advised they cannot force this and that we would need to agree to a change in contract.

    (in Scotland don’t know if that is different)

    Premier Icon aracer
    Subscriber

    4 day week?

    pstokes99
    Member

    Richc – In the circumstances you describe you have 3 options: acquiesce to the variation; resign and claim constructive dismissal; stand and sue, by working under protest and seeking damages.

    With regard to resisting unilateral variation you must take steps to rebut it [the variation] – simply refusing to sign the amended contract is unlikely to be sufficient. Without formal rebuttal the court/tribunal will likely find that you accepted the breach/variation.

    Both ‘stand and sue’ and ‘constructive dismissal’ will require action on your part almost as soon as the variation is imposed and, as stated by others, you should take specific advice (CAB, Union etc) on your circumstances as the remedy you should seek will be largely detirmined by a signifanct number of individual factors. Once the potential value of any claim has been established you can take a view as whether to ‘go to law’ or maintain your continuing, relatively stable, employment relationship.

    Zedsdead
    Member

    If they cut your pay then you cut your work output.

    Simple.

    Premier Icon metalheart
    Subscriber

    [/quote]4 day week?

    aracer – if thats directed at me yeah supposedly a 4 day week.

    But you know how things get ‘if you want to get paid we really need this done by …’ and you end up working same hours for less.

    however if its all a downturn then presumably there will be less work and hence genuinely reduced hours.

    Its not the partners fault: they have a couple of hundred million pounds worth jobs on the books that have been put on hold due to the ‘credit crunch’. They are in it as much as me…

    Premier Icon aracer
    Subscriber

    Was just going to say that if you can afford it it’s not so bad. I do a 4 day week anyway, and it’s a lot better than working 5! Do tend to get a bit more than 80% done in 4 days, but that’s down to productivity more than working extra hours.

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