Being told wages are being (temp) reduced

[einstein75]

Afternoon all,

Mrs Einstein returned home from work yesterday, following a meeting with the MD of the small company she works for, with the news that her wages are to be reduced by 25%.

She's been told this is a temporary measure for 3 months as the company is not doing as well as planned. I've had a bit of a look online and it seems they need the employees have to agree to this to implement it - however we're realistic and understand that if they don't then they could just as easily make people redundant etc.

I've suggested that she speak to the MD and suggest that she will work 25% less hours if her salary is being reduced by that amount.

Is there anything else we should be aware of or has anyone got any pointers/been in a similar situation?

Any help gratefully received.

[Kermit power]

einstein75 said:

I've suggested that she speak to the MD and suggest that she will work 25% less hours if her salary is being reduced by that amount.

Whilst that might seem "fair" on the surface, doesn't that rather negate the point of making the pay reduction in the first place?

[bulldog5046]

Kermit power said:

Whilst that might seem "fair" on the surface, doesn't that rather negate the point of making the pay reduction in the first place?

Seems reasonable if she could complete her work in 25% less time....

[einstein75]

Kermit power said:

einstein75 said:

I've suggested that she speak to the MD and suggest that she will work 25% less hours if her salary is being reduced by that amount.

Whilst that might seem "fair" on the surface, doesn't that rather negate the point of making the pay reduction in the first place?

One of the side effects of them not doing as well as planned is they simply are not as busy anymore, seems silly to be in the office for the same amount of time when there isn't the work available?

Not sure how this would negate the point of the pay reduction but willing to understand your reasoning?

[CDP]

einstein75 said:

One of the side effects of them not doing as well as planned is they simply are not as busy anymore, seems silly to be in the office for the same amount of time when there isn't the work available?

Not sure how this would negate the point of the pay reduction but willing to understand your reasoning?

Nothing at all wrong with your suggestion. The worst he can do is say no.

[Kermit power]

einstein75 said:

Kermit power said:

einstein75 said:

I've suggested that she speak to the MD and suggest that she will work 25% less hours if her salary is being reduced by that amount.

Whilst that might seem "fair" on the surface, doesn't that rather negate the point of making the pay reduction in the first place?

One of the side effects of them not doing as well as planned is they simply are not as busy anymore, seems silly to be in the office for the same amount of time when there isn't the work available?

Not sure how this would negate the point of the pay reduction but willing to understand your reasoning?

Fair enough if they're not actually going to need her time. I had assumed the idea of cutting wages temporarily would be to allow them to sell whatever it is they sell at a more competitive price to build the business back up again, hence getting the company back on the up again, but presumably still requiring all hands to the pumps to service the upswing.

[Odie]

Downward spiral, she needs to find another job ASAP.

[rb5er]

I`m pretty sure they can`t legally just reduce her pay for the same amount of hours but could reduce her hours resulting in lower pay.

[alock]

einstein75 said:

Is there anything else we should be aware of or has anyone got any pointers/been in a similar situation?

Small companies often have cash flow problems. Our company has done the same in the past and it is the alternative to redundancies.

Your alternative will be to accept that the position paying £x no longer exists and accept redundancy.

[Evo141n]

We've been on a 10% reduction for 2 1/2 years. There's is nothing much you can do about it. It's a lot better than being made redundant. If the company is not doing so well then it's best to help as much as possible, making sure that all others are doing the same. It's a very bad deal if some folk accept and some don't, then again those who don't are normally the one facing redundancy first. You could always find another job, but that's easier said than done in this climate.

[Evo141n]

rb5er said:

I`m pretty sure they can`t legally just reduce her pay for the same amount of hours but could reduce her hours resulting in lower pay.

And why not? Employment contracts change all the time, pay can be negotiated up... and down. Is up to you whether you want to stay and ride out the storm.

[rb5er]

Evo141n said:

rb5er said:

I`m pretty sure they can`t legally just reduce her pay for the same amount of hours but could reduce her hours resulting in lower pay.

And why not? Employment contracts change all the time, pay can be negotiated up... and down. Is up to you whether you want to stay and ride out the storm.

Because it is illegal due to UK employment laws.

http://www.telegraph.co.uk/finance/personalfinance...

[CDP]

rb5er said:

Because it is illegal due to UK employment laws.

http://www.telegraph.co.uk/finance/personalfinance...

There's some very good advice there about making sure potential redundancy payouts or pensions are not affected.

[Evo141n]

rb5er said:

Evo141n said:

rb5er said:

I`m pretty sure they can`t legally just reduce her pay for the same amount of hours but could reduce her hours resulting in lower pay.

And why not? Employment contracts change all the time, pay can be negotiated up... and down. Is up to you whether you want to stay and ride out the storm.

Because it is illegal due to UK employment laws.

http://www.telegraph.co.uk/finance/personalfinance...

It's perfectly legal for them to ask you to agree to a pay reduction. And if you don't... we all know where that will eventually lead.

[barker22]

Evo141n said:

It's perfectly legal for them to ask you to agree to a pay reduction. And if you don't... we all know where that will eventually lead.

Yes, to her getting a payout for unfair dismissal at an employment tribunal.
Or if you were aiming more to the company going down the pan, then if a 25% reduction in wages of a small company is the difference between surviving and failing then I don't think they have much time left anyway.

[Amateurish]

barker22 said:

Yes, to her getting a payout for unfair dismissal at an employment tribunal.

Not necessarily. It could lead to a redundancy or even, if she hasn't been there long, a termination with notice. Is she a long term employee?

[northandy]

This is becoming increasingly common.

If it were me id expect/want to question a few things :

Is every employee having the same 25% cut?.

If workload as dropped ask for time off to cover, so a shorter working week.

You will need an amendment to her contract (assuming she has one). Push for a time restriction of only applying for 6/12 months, also have a term added to ensure should redundancy be required then her original salary to be used.

[2 sMoKiN bArReLs]

Hate being the harbinger of doom, but not many firms actually recover from this. Time to look around methinks.

(Tis a classic path that's been trod oft before)

[GSP]

I once worked for a reasonably well known 'international' construction management consultancy.

They reduced everyone's pay (well almost everyones) by 12.5% when the recession hit... The directors were still given brand new M3s and Q7... And 4 years on that 12.5% has never been given back. With pay freezes still in place.

If you didn't accept it after the consultation period then your contract was terminated and a new on issued... You could either take it or leave it.

[bulldog5046]

GSP said:

I once worked for a reasonably well known 'international' construction management consultancy.

They reduced everyone's pay (well almost everyones) by 12.5% when the recession hit... The directors were still given brand new M3s and Q7... And 4 years on that 12.5% has never been given back. With pay freezes still in place.

If you didn't accept it after the consultation period then your contract was terminated and a new on issued... You could either take it or leave it.

Was this one of those companies that after freezing pay then went on to post record growth and profits through the recession? They really piss me off.