Alex Can a employer impose a pay cut on an employee?
An employer cannot usually impose a pay cut unilaterally on employees. However, there are situations where this may be possible – for example, the right to reduce their remuneration package may be covered in the employment contract.
When is a pay cut for an exempt employee is temporary?
When a pay cut for an exempt employee is temporary. It seems strange to say that a temporary cut would be illegal while a permanent one wouldn’t, but one of the requirements for exempt employees is that their pay remains the same, regardless of the number of hours they work.
When does it make sense to take a pay cut?
When a demotion occurs, and the previous salary is considerably above what other people in the new position are making, a pay cut makes sense. When the demotion is voluntary—for example, you accept a lower position because you want less stress or a completely different set of tasks—then you’ll accept a pay cut easily.
When is a pay cut discriminatory or retaliation?
When the pay cut is a response to some protected activity. For instance, if you complain that your boss is sexually harassing you, and then your pay is cut, that is called retaliation and it is illegal. When the pay cut is discriminatory.
When is a pay cut acceptable for employees?
When a Pay Cut Is Acceptable. In some situations, employees accept the change, like when everyone in the company or department is getting a pay cut for the benefit of the business. In other case, employees welcome it, like when they want less responsibility. And sometimes, a pay cut is intended to get employees to quit.
When the pay cut is a response to some protected activity. For instance, if you complain that your boss is sexually harassing you, and then your pay is cut, that is called retaliation and it is illegal. When the pay cut is discriminatory.
How does a pay cut affect a company?
Pay cuts are often made to reduce layoffs while saving the company money during a difficult economic period. A pay cut may be temporary or permanent, and may or may not come with a reduction in responsibilities. Some pay cuts also affect an employee’s raises, bonuses, and benefits.
Can a employer unilaterally cut an employee’s pay?
By law, employers cannot unilaterally cut an employee’s pay. If, in exceptional circumstances such as the current recession, employees agree, they need to be aware of the implications for any subsequent redundancy payment and their pension rights (see below).