Forced salary reduction
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.Posted 9 years agomrmoMember
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.Posted 9 years ago
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.Posted 9 years agoads-bMember
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.Posted 9 years agoTandemJeremyMember
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.Posted 9 years agocrazy-legsSubscriber
They can ask you to volunteer for pay cuts.Posted 9 years ago
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.glenhSubscriber
Devaluing within the UK, not realtive to other currencys.Posted 9 years ago
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.
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 😉Posted 9 years agopstokes99Member
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.Posted 9 years agometalheartSubscriber
[/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…Posted 9 years ago
The topic ‘Forced salary reduction’ is closed to new replies.