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Lucie Mitchell

Sift Media

Freelance journalist and former editor of HRZone

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HR tip: Reducing wages

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These questions are being answered by Learn HR, a market leader in the provision of HR and payroll training and nationally-recognised professional qualifications.


Question:

"Because times are hard we would like to reduce the wages of our employees. Can we do this?"

Answer:

You cannot do this unilaterally since it would constitute breach of contract. You should try to persuade the employees to accept the cut by explaining the reality of the financial state of the organisation. If appropriate, warn them that an alternative might be redundancy, though be careful with that threat since some employees might welcome a lump sum payment and risk unemployment.

If necessary negotiate something with them such as increased holiday for a limited period. If that fails you could give every employee his or her due notice to end their current contracts but offer continuous service on new contracts incorporating the reduced remuneration level. An aggrieved employee could pursue a claim for breach of contract but, provided you can demonstrate a sound business reason for the change and show evidence that you have consulted fully, you have a good chance of defending yourself successfully. But I really would work hard to get agreement.    

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Lucie Mitchell

Freelance journalist and former editor of HRZone

Read more from Lucie Mitchell
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