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Problems at Work

Do I Have To Take A Salary Reduction?

Q.  I have recently been told that due to the economic downturn my salary is being reduced by 10 per cent.  I have been told that if I don't accept this I will be dismissed.  Can my employer do this?

A.  In the current economic climate, a number of businesses have had to look at ways of cost cutting in order to survive.  Typically, employment tribunals have not looked favourably on employers implementing salary reductions but if an employer follows certain steps they have become more receptive in recent time. 

Firstly your employer will have to show that they have a genuine business reason for reducing your wage and that they have considered alternatives.  Secondly your employer will have to show that they consulted with employees over the proposed change and considered any ideas that you put forward.  Thirdly, your employer should seek your consent to a reduction in wages.  If you fail to agree at this stage your employer could take steps to dismiss you. 

Ultimately if you failed to agree, your employer could dismiss you with notice and offer you a contract on the new terms.  If your employer has a good business case and has followed proper procedures, your employer will then be in a strong position to argue that it has fairly dismissed you.  If you need to seek further legal advice, please do not hesitate to contact us.

Emma Carter, Solicitor

This article was previously published in the Stamford Mercury.

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