Reduction in wages

Employers are increasingly looking at ways of saving costs and there has been much in the media about companies requiring their staff to accept a reduction in pay.  But, is this lawful?  And what should you do as an employee if the question has been raised?

Your salary is a fundamental term of your employment contract so an employer cannot simply change that without your agreement.  However, there may be repercussions if you refuse to accept a change – such as redundancies.

When considering the issue of a reduction in wages both employers and employees should try to work together if possible.  Issues which need to be considered are:

• Has a proper consultation taken place?
• Is this happening company-wide?  If not, why not?
• Can an end date be agreed so that the reduction only lasts for a certain period?
• If a reduction in wages is required, will there also be a reduction in hours worked?  Or in respect of targets where appropriate?
• Has everything been clearly recorded in writing?

It is also important not to fall foul of the current National Minimum Wage legislation.

Reduction in wages is often a very emotive subject for employees who rely on their wages to pay their bills.  It is therefore crucial it is handled correctly to avoid the employee making a claim of unfair/constructive dismissal or breach of contract.

For advice on this or other employment queries, please contact our Head of Employment, Ilinca Mardarescu