25% reduced salary, without warning?!

retrocircles

had a meeting at work today basically telling me that i will only be getting paid 25% of my normal salary this month.

is this allowed?

the story, which is long...

i work for a private company, which wasn't meeting the planned targets approximately 6 weeks ago. to cut costs & ensure the business would run smoothly again, redundancies were made. this was a hard time, but obviously i was glad that i was kept - knowing my job was now safe & the company was now safe again.

a few weeks later, the managing director had a meeting saying that we had enough money to last the month of november & to continue after this point we would need to find another investor. we had a few lined up, one being VERY interested as long as the company hit certain targets. all we needed to do was keep our heads down, work hard & meet those targets. then, at the end of november we would have an answer as to whether the company would dissolve some time in december, or stay open under the umbrella of head office (it's a nationwide company).

the main investor has been popping in & out of the building all month, along with head office who we believed we probably going to take over at the end of the month as they were getting more & more involved.

today we had a meeting, the whole team (just 7 staff) present, with the MD stating that the investor would be making a decision on wednesday next week. the wages leave the company bank account on the 25th, and if all wages were paid, the company would become insolvent, making the investment impossible next week as the company would legally not exist. so, in order to keep company solvent to gain investment next week, we must take 25% of our wages. MD states if we want all of our wages, then the company will go under, and we will basically get nothing - since the company doesn't really have assets to sell if administrators were to come in.

then next week IF the investment comes through, we will get all OR a percentage remaining of our salary. MD states that he may need to do financial checks to see if he can afford to pay the 75% next week. he MAY need to pay a further 25% then 50% the week after that.

not to mention, next week is december, so i'm not being paid in full for november, let alone december! am i a mug if i turn up on monday to work another week for free?! when i could potentially be needing to look for work to start on monday?!

i should also state that the investment ISN'T guaranteed. MD has stated things in the past that were 99% sure, and they haven't followed through.

BUT if MD just let go of the company i think head office would step in, as it's a nationwide network, where our company in the midlands is quite important for the smooth running of the nationwide business, so i would be surprised to see it close.

so, what do i do?!

i'm at the edge of the edge of the edge. losing my job/not getting paid now would have my home reposessed, car taken etc etc. i have loans, credit cards, mortgage, business loan, student loan.

can a company not pay me when in theory they are still operating? do i go into work as normal until the investment decision is made? do i go into work until the end of november, but refuse to start a new month without being paid in full for november? if i choose to work as normal, but then on thursday next week it may be a 'no' to the investment and i will have no notice for termination of work, and won't have another job lined up. i work 9am-6pm so looking for work/calling companies is a big no-no. i don't really have any lunch breaks due to the workflow in the office & being 'management' overseeing everything. i was promised a £3k payrise after 3 months which i haven't got due to the company financial situation. i don't have a contract, after 3 months! not because i'm on probations, as i'm a recognised 'amazing' member of staff apparently & was promoted to office manager after 6 weeks!

it's a farse, but until now it was a farse that paid my bills & made me management, so on my cv it looks lovely! now they're not even doing that (paying my bills).

ceridwen

I don't know the answer to that. Sorry to hear your predicament.

Errrr...it doesnt look good. I suggest you look up "constructive dismissal" - not paying out your wages as per normal has surely got to rate as good grounds for that I would have thought.

Second point on list - start looking for another job pronto.

Good luck.

dmg24

ceridwen wrote: »

I don't know the answer to that. Sorry to hear your predicament.

Errrr...it doesnt look good. I suggest you look up "constructive dismissal" - not paying out your wages as per normal has surely got to rate as good grounds for that I would have thought.

Second point on list - start looking for another job pronto.

Good luck.

I wouldn't be looking at constructive dismissal quite just yet, unless you want to guarantee ending up with no job and no money for Christmas. :rolleyes:

I understand the difficulty that such a pay cut must bring, but I would look at this on a practical level, rather than going down legal channels (which inevitably take a long time to resolve). I would give your employer a short time to see if the new investor does come through. You really have nothing to lose by doing this.

Looking at your own financial commitments, please don't worry about your house. A lender will not attempt to repossess your house for missing one payment, and if you tell them in advance, they should be more understanding.

I do understand your concerns, but please do not go making any rash decisions.

PasturesNew

I'd say it depends how much you need the money - and you do.

At the moment you have a small chance there will be an investor, against jacking in your job and trying to explain to the Dole Office that you had to (they don't like paying out if you've made yourself unemployed).

So, on the balance of things, I'd go in and wait it out. I'd just work to rule though. So I'd turn up on time and go on time. I'd take my full allowed lunchbreak. So I'd stop putting in any/all extra effort for them.

Re money - at the end of the day if they don't have the money then you can't have it. That's a basic fact of life. Your boss seems to be trying what he can - and informed you what's going on at least... I'd just be careful how much extra free work/overtime I gave to them from now on.

And if the boss wasn't looking I might be tempted to sneak onto a jobs website and see if I could find anything to apply for.

LittleVoice

If 25% were to be less than minimum wage for someone this would not be legal.

Incisor

retrocircles wrote: »

... today we had a meeting, the whole team (just 7 staff) present, with the MD stating that the investor would be making a decision on wednesday next week. the wages leave the company bank account on the 25th, and if all wages were paid, the company would become insolvent, making the investment impossible next week as the company would legally not exist. so, in order to keep company solvent to gain investment next week, we must take 25% of our wages. MD states if we want all of our wages, then the company will go under, and we will basically get nothing - since the company doesn't really have assets to sell if administrators were to come in.

then next week IF the investment comes through, we will get all OR a percentage remaining of our salary. MD states that he may need to do financial checks to see if he can afford to pay the 75% next week. he MAY need to pay a further 25% then 50% the week after that.

Difficult to advise YOU what to do, but here is what I would do.

I would decide if I believed him. If I didn't, then I would insist on full pay. If I did believe him, then I would make him a loan of 75% salary for 2 weeks. I would have done something to help the business for the time scale the investor needs, but I would be limiting my exposure to risk.

If it helped the company, that would be good. If the company went bust, I would only be half a week's pay worse off than if I had insisted on 100% pay, but not been paid for one week.

Things must be on such a knife edge with this business that you must be facing the end of it very soon anyway

retrocircles

thankyou for the advice.

the only thing that puts me off about not turning in on monday, is if i do, and the investment is denied, i won't have a job, i won't be paid for the 1st week in december OR 3 weeks in november, and i definitely won't have a job lined up.

Incisor

retrocircles wrote: »

thankyou for the advice.

the only thing that puts me off about not turning in on monday, is if i do, and the investment is denied, i won't have a job, i won't be paid for the 1st week in december OR 3 weeks in november, and i definitely won't have a job lined up.

Sorry to be gloomy. The boss has let the cat out of the bag by cutting pay to 25%. If the investor hears this, he WILL NOT invest, he will let the business go into liquidation and buy it for less form the liquidator. At least, that is my take. That is what I would make my plans on.

ceridwen

Its a good point re this reduced pay may be less than NMW - in which case I guess you have that amount of redress - i.e. chasing this firm for the difference between what hes paying you and NMW and regarding the rest of your salary as money you are (by force) loaning to the firm.

Wondering whether you could give them an official letter charging them x% interest for the period of the "loan"??? Wondering if that would mean they would "pay you back" sooner??? (or does that come in the same category as employers are allowed to pay the annual cost of living rise months late each year and the employee cant get interest on "their" money)?

lesley1960

Paying only 25% of the wages does not improve the solvency of a company .

If I was generous i would say the company has a cashflow problem , a lot of companies fail because of lack of cashflow not because they arent profitable . For someone to invest they would have to be happy that the company isnt insolvent and is profitable and they would have been looking into the accounts very closely , and investment doesnt happen overnight It can take a while to go through.

But sadly there is not a lot to do if they dont have the money to pay you , its probably best if you start looking for another job and hope they can come up with the rest of the money

pinkshoes

Does the company actually own any assets? i.e when everything is sold off, will they be able to pay you?

This happened to someone i know, where they only got a % of their salary, but were asked to carry on working. He did, and the company went under, so all the workers took them to court to try and reclaim the money, which was a wasted effort, as after all the debts were paid, there wasn't enough left over to pay the workers, and I think he got about 5% of what was owed!!

I'd say you have nothing to lose by being frank with your boss, and asking him to be 100% honest with everyone. Point out to him that an investor won't be interested if they find out that only 25% salaries were paid...

I'd also start looking for and applying for other jobs, and if you get an interview you can fake a dentist appointment!