The Balance Careers uses cookies to provide you with a great user experience. Second, can I refuse the pay cut and still be considered "laid off" (Note: Even after my pay cut I would still be above the minimum wage and also above the amount that I would be given in unemployment insurance on a weekly basis)? Can an employee refuse a request to reduce their pay? We are asking all employees to accept an 8% pay cut. For example, an employee's hours or salary cannot be cut for taking time off for jury duty, to serve in the National Guard, or for whistle-blowing regarding an employer's actions that are harmful to the public. (“Non-exempt” and “exempt” refer to whether the employee is covered by the overtime protections afforded by the Fair Labor Standards Act (FLSA)., An exempt employee would be one that met the criteria for not being entitled to overtime pay. A pay cut cannot be enacted without the employee being notified. You can refuse a pay cut - it's called quitting your job. If they do refuse to accept pay cuts, can the employer dismiss those employees? Can an Employer Force You to Work Overtime? In those situations, an employer cannot arbitrarily cut your pay or change your hours. However, difficulties may arise when employees begin refusing pay cuts. Even with a pay cut, non-exempt employees—hourly wage earners who make less than $684 per week—are generally guaranteed overtime pay. In the current economic downturn, employers are keen to find ways to save money and try to stay afloat. For more clarity in regards to the legality of this situation, I suggest speaking with your local labor board. In many cases, the answer is yes. At least that way, the employees still remain in work. If not, then they can't force shorter hours and cut your pay as a result without consulting you first. The Employment Appeals Tribunal, however, held that the Tribunal should, in fact, have focused on the reasonableness of the employer’s decision to implement the changes. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. Should an Employer Increase Employee Hours with No Extra Pay? The executive staff has already taken the same pay cut. Employment at will means that when workers don't have a formal employment contract or are covered by a bargaining agreement they can be terminated, demoted, and have hours reduced or pay lowered at the company's discretion. If you aren't protected by an employment contract or bargaining agreement, your employer can reduce your salary and your work schedule at any time, with some limitations.. U.S. Department of Labor. U.S. Department of Labor. Before cutting an employee’s pay, employers should consider the effects. Unlike nonexempt employees, exempt employees are not paid according to hours worked, so they should always get their full agreed-upon pay, unless there’s a legally-allowed deduction — such as the employee performing no work for the entire workweek.. We are asking to reduce your monthly salary from $4,000 to $3,680 beginning one month from now. Usually, an employer needs the consent of each individual employee before a pay cut is imposed. Learn the Legal Issues Related to Cutting an Employees Pay, Learn the Difference Between an Exempt and a Non-Exempt Employee, List of Federal and State Minimum Wage Rates for 2021. A No. PROFILE. As you are aware, the recent economic downturn has adversely affected Broadway Inc. To increase cash flow and limit layoffs, the company has decided that salary reductions are necessary at this time. Here's a chart that lists the state minimum wage rates (2021). You can refuse a pay cut - it's called quitting your job. "). The information contained in this article is not legal advice and is not a substitute for such advice. If you decide to take the pay cut, you may be … Can you collect unemployment benefits if you refuse a pay cut? Pay cuts are often made to reduce layoffs while saving the company money during a difficult economic period. Workers with individual employment contracts or protections under union contracts are typically shielded from salary or wage reductions during the periods covered by those contracts. If you pay is being cut drastically - say you're making $30 an hour and they want to cut you to $8 - you could probably still get unemployment, but probably not with a cut from 10 to 8. Some pay cuts also affect an employee’s raises, bonuses, and benefits. Staff at London Heathrow Airport face being sacked if they refuse to accept a 15 per cent pay cut during the coronavirus pandemic. Lyons Davidson’s employment teams are happy to provide such advice. If you're an employee who isn't protected by a bargaining agreement or employment contract, there is no set amount that you have to be paid. However, they may be eligible if they can show there was "good cause" to refuse … During this period, we will continue to monitor the company's financial situation. As reports ESPN … If you pay is being cut drastically - say you're making $30 an hour and they want to cut you to $8 - you could probably still get unemployment, but probably not with a cut from 10 to 8. If i refuse the pay cut, can they terminate my employement with or without severence pay? We have recently been instructed to assist a client who was, unfortunately, quite suddenly dismissed after he refused to accept a pay cut. However, in a recent case heard by the FWC, it was found that a Wellpark Holdings employee was unfairly dismissed for refusing to accept a 10% pay cut. If you decide to decline this reduction in pay, you will be removed from your position effective one month from today, with severance pay. It may be clear that if staff refuse to vote for a pay cut, then the firm will have to shed a certain number of jobs to save money. Thousands of … So what will likely happen is that they sack you and just pay you the contractual or statutory (if it isn't included in your employment contract) notice. Nothing says you must accept the pay cut and keep working for this company. Generally, people can't get unemployment benefits if they quit or refuse a work offer, experts say. If you’ve been unhappy, if you’ve been thinking of moving on, or even actively interviewing elsewhere, this could be the catalyst you need to hand in your resignation. (The federal minimum wage is currently $7.25 an hour, but many states have higher minimums.) When employers reduce wages, they are required to do it in an equitable manner. Better option, so you don't have a dismissal for a reference, is to accept the pay cut and look for a new job. A pay cut may be temporary or permanent, and may or may not come with a reduction in responsibilities. If a refusal is received, the employer must decide whether to terminate the contract of employment by issuing the contractual period of notice. When the pay cut is discriminatory. In fact, some experts recommend it. A pay cut can be anything from illegal, financially troubling, emotionally unsettling, to devastating. Generally, people can't get unemployment benefits if they quit or refuse a work offer, experts say. The amount you make and the hours you work aren't guaranteed. 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. What Is Minimum Wage for Workers Who Receive Tips? If a refusal is received, the employer must decide whether to terminate the contract of employment by issuing the contractual period of notice. Employers should approach this subject with caution and seek legal advice from the outset to ensure that they have consulted with the workforce properly before they implement any changes. Wage/salary reductions for reasons that are in opposition to public policy are also not legal. However, employers cannot reduce wages to a level which is lower than the minimum wage in their state.. Accessed April 22, 2020. Please negotiate personally or through the union/association that the Pay cut/if any is reasonable and leaves enough to pull on with life necessities. In Garside and Laycock Ltd v Booth the EAT has held that an employment tribunal misdirected itself in finding that it was unfair to dismiss an employee who refused to accept a pay cut. See if you’re eligible for partial unemployment benefits. If all men get a pay cut, but no women, that's illegal. Q If the employer terminates employees’ contracts, will they be entitled to redundancy pay if they refuse the pay cut? When there is no prior notification about the pay cut. When the pay cut is a response to some protected activity. There are some exceptions to the minimum wage rules, but you cannot be paid less than the minimum wage rate for your classification in your state. (That is, your boss can say, "Starting today we're paying you $5,000 less per year," but can't say, "Oh, by the way, the paycheck you get today will be less because we cut your pay $5,000 per year. Can you collect unemployment benefits if you refuse a pay cut? pay cut cannot be enacted without the employee being notified. Your employer doesn’t need a reason to cut your pay or reduce the hours you are scheduled to work. Even if your employer is not threatening dismissal, there are other potential consequences of refusing to accept a reduction in salary. Hello, thank you for posting to r/Jobs!. If they do refuse to accept pay cuts, can the employer dismiss those employees? No one can force you to take a pay cut, so you could reject such an offer even if your fellow workers accept. Mr Booth refused to accept the changes, so his employer terminated his employment and offered him a new contract encompassing the new terms and conditions. A reduction in pay is a variation of an employment contract, and something that both the employee and the employer need to agree on, so a boss can't unilaterally cut a worker's pay. CATEGORY: Employment. A pay cut is a reduction in an employee's salary. So, if they propose a pay cut, and you refuse, they will have to … Your employer can change any aspect of your contract, as long as they give you 12 weeks notice. If the employer makes the pay cut without the employee’s agreement or by formally terminating and replacing their contract, the employee may either make it clear that they are working under protest, or resign on the grounds that the employer has breached their contract of employment by imposing a unilateral change. For this reason, you might consider requesting, in writing, that your employer not contest your unemployment application if and when you leave. Accessed April 22, 2020. If you refuse to take a pay cut then your employer either has the choice of backing down or, as threatened, making you redundant. Pay cuts can't be a retroactive surprise. Summerfield Browne Limited. But companies cannot make … Know the Impact of the Minimum Wage Increase? So, if they propose a pay cut, and you refuse, they will have to give you 12 weeks notice to quit (or give you 12 weeks pay in lui, and let you go straight away). I am a bot, and this action was performed automatically. 1 answer. In a video conference among top brass last Friday, it was discussed how the players, akin to the everyday public, should take a pay cut too. Your understanding, support, and co-operation to help Broadway Inc. endure the current economic situation is greatly appreciated. Instead of redundancies being the first port of call, many employers have sought to reduce the salaries and benefits of current employees. This means earning at least a certain amount of money—currently, $684 per week—and meeting certain “duties tests.” Salaried workers are classified as exempt.). Sometimes the repercussions aren’t worth it. Tap into your savings (and if you can, still build it up after a pay cut) Your financial response to taking a pay cut also depends on how much you have in your savings. If you state you refuse and the employer therefore terminates you, or you are demoted and quit due to the pay, etc. However, difficulties may arise when employees begin refusing pay cuts. Case Review: Dismissed for refusing a pay cut. "Fact Sheet #70: Frequently Asked Questions Regarding Furloughs And Other Reductions in Pay and Hours Worked Issues." It has been accepted that employers may negotiate with their staff to take pay cuts during difficult financial times as an alternative to redundancies. "Minimum Wage." Kathy WilliamsVice President, Broadway Inc.123 Maple StreetHudsonville, NY, USA 10711. Tel: 0344 251 0070 - Email: [email protected]. Is it legal for an employer to cut your pay or your hours? We appreciate all the hard work you have put into your position at this company, and we do not want to lose you as an invaluable employee. Reducing an employee’s pay is no minor thing. For more information, please contact us on 0117 904 6000. Your employer might have … If the economic situation and the company's performance improves in the next two quarters of the year, your former salary may be restored. To be legal, a person’s earnings after the pay cut must also be at least minimum wage. Your current position and duties will remain the same. If you want to dispute it argue with the hair cutter insist you can't be expected to pay for poor work, then inform them while you'll pay if required you're going to take them to small claims court for the cost of the hair cut AND the cost of hiring another barber to fix their terrible work. Some states have a higher minimum wage than the federal minimum. If an employer cuts an employee’s pay without telling him, it is considered a breach of contract. Please contact the moderators of this subreddit if you have any questions or concerns. However, they may be eligible if they can show there was "good cause" to refuse … Instead of redundancies being the first port of call, many employers have sought to reduce the salaries and benefits of current employees. This question was recently considered in the case of Garside and Laycock Ltd v Booth. The letter will likely explain that there will be a pay cut, with details of how much salary will be reduced and when the reduction will go into effect. It is important for employers to be able to demonstrate that they have considered other options, the procedure they have used to reach their decision and the impact those decisions would have on the workforce. He continued to refuse to accept the new contract, despite the offer of reviewing his salary after six months. Accessed April 22, 2020. It's also legal for your employer to cut your pay, either instead of or in addition to a cut in hours, unless the pay cut means that your hourly pay is below the minimum wage. 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. In order for an employer to reduce overall employee headcount, and not pay severance, this is sometimes seen as a WIN-WIN solution. If your employer does cut your pay or schedule, you’ll typically receive a letter outlining the change. When the pay cut is a response to some protected activity. Your employer can change any aspect of your contract, as long as they give you 12 weeks notice. LOCATION: GWENT. 1 Are you anticipating a reduction or pay in hours? We just wanted to let you know that we have a new discord server, come join the chat!. Generally speaking, an employer cannot reduce the pay specified in a contract of employment as this would amount to a breach of contract. Its natural the staff would refuse the pay cut, if the communication was as blunt as you describe. An individual employee may well struggle to argue that a dismissal was unfair for not accepting a reduction in wages and/or benefits, where their employer has sought to implement a reduction in wages and benefits across the whole of the workforce, and the majority of that workforce has accepted the change. Before You Make Employee Layoffs, Consider Cost-Cutting Strategies. If you state you refuse and the employer therefore terminates you, or you are demoted and quit due to the pay, etc. At least that way, the employees still remain in work. Alison Doyle is the job search expert for The Balance Careers, and one of the industry's most highly-regarded job search and career experts. In this case, the employer sought to impose changes to terms and conditions, including a pay reduction of five per cent. A pay cut is a change to your employment contract and you have the right to disagree with it. Many organisations will now be raising the idea of pay cuts - … An employee is entitled to refuse a request that is made of them to reduce the amount of money that they are paid. "They are not obliged to give their consent, and they could take legal action to prevent such a change." Companies cannot target workers for wage reductions by race, age, or any other protected class under discrimination statutes. When the pay cut is discriminatory. Can an employee be dismissed for refusing a pay cut? Pay cuts are legal as long as they are not done discriminatorily (i.e., based on the employee’s race, gender, religion, and/or age). The federal minimum is $7.25 per hour. "Final Rule: Overtime Update." Mr Booth appealed the decision to dismiss him, which was not upheld. Unfortunately, employers can, in most cases, cut your pay or reduce your hours since most employees are "hired at will.". By using The Balance Careers, you accept our. An employer can give you a cut in pay as long as they notified you prior, the pay cut isn’t discriminatory, your pay isn’t under minimum wage, and if the paycut doesn’t breach any contracts. It is not unusual for businesses to try and reduce their overheads by reducing the amount they pay to their staff during times of financial difficulty. Posted on Nov 24th, 2011 by Lyons Davidson, By using this website you agree to accept our Privacy Policy and Terms & Conditions Accept, Civil Litigation: Professional Negligence, Commercial Litigation: Professional Negligence. Please negotiate personally or through the union/association that the Pay cut/if any is reasonable and leaves enough to pull on with life necessities. The Employment Tribunal in this case focused on the reasonableness of the employee’s refusal to accept a pay reduction. U.S. Department of Labor. An employee is entitled to refuse a request that is made of them to reduce the amount of money that they are paid. Your friend will now have to try and recover the situation and use a bit of common sense, communicate openly and directly, explain the company situation and earn some good-will back. When Employees Can be Fired for No Reason, Fact Sheet #70: Frequently Asked Questions Regarding Furloughs And Other Reductions in Pay and Hours Worked Issues. 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