Enforced Pay Cuts. Is it Legal?

cormaclynch

Hi There,

a frined of mine got a job in an IT company in June. On Firday they were told they would have to take 1 week unpaid leave in september and another one before Christmas. They were given nothing to sign.

Today they got an email saying that their septmber pay will be automatically reduced by one week. I am just wondering if anyone can tell me if this is legal or not. I was under the impression that for a pay cut you have to agree to it in writing before they could adjust your pay?

Thanks

Grovester_2

What is the alternative? Redundancies?

cormaclynch

Yeah redundancies are coming too. But he is fairly sure he'll be included in the next round of them too.

I'm am just curious, basically, is it legal....He wont be taking the company to court but I just think it is a bit unfair to be able to do that. At least let the company it is illegal. They are an American new setup recently. Maybe it is legal in the states to do it but they should know and abide by the local law as well

KingGooner

We went through the same thing recently - also an American Company - and in the US they just unilaterally cut pay and 401k contributions (assume this is some sort of works pensions). However under UK Employment law they had to email us for acceptance of a pay cut as they were changing the terms of the contract.

It was said that if you refused (which I did) that this would not be held against me in the future ........ right !!!!!!!!!!!

By the way I understand that you have to accept/reject all changes of contract - so in theory - if they offer you a pay rise you should also have to accept that. However I don't suppose anyone is going to go legal on that issue!

jazzyman01

This is not really a pay cut - it is a one week unpaid leave. Unless this is specifically allowed in the contract it is unlawful. You agree to work x for x pay, holiday entitlement etc. If you do not agree to the one week enforced holiday then they must still pay you. Issue is they could then state no longer required, not met probation etc as only a couple of months employment.

Cerealfreak

Before I took VR we went through a similar pre-redundancy stuff, the Union reps checked it out and came back with the following info -

Paraphrased not meant as legal advice (CYA

"Under US legislation this is perfectly legal on a standard employment contract <we were a US Owned Company> however, under UK Law <although US based they are legally bound by the laws of the Countries they physically employ staff in> they cannot enforce paycuts or forced unpaid leave. All contract changes must be agreed to and accepted and it is illegal to treat an employee negatively if they refuse to accept the proposed changes."

A line accompanied the original proposal from HR saying that anyone that doesn't agree to it would have a discussion with their line manager, so we all knew what that would likely mean, but from what we were told no this isn't legal if they operate in the UK, even if they are US based.

patanne

Isn't this a version of short time? If so I believe (but I'm sure someone on here will be able to confirm or deny) that they cannot change your holiday entitlement although they can reduce pension contributions for example. There is also a Statutory Guaranteed Payment of £25 per day (taxable of course) which is payable for 5 days every 3 months. Not a great deal but better than nothing!

zzzLazyDaisy

Just to point out - OP's friend has less than 12 months service. This means that he has little protection under the law if he is dismissed.

If he objects to the pay cut, and is dismissed because of that, he can make a claim for unfair dismissal claiming that he was dismissed for seeking to rely on his statutory right) to be paid, in which case the 12 month rule doesn't apply. But the chances are he will lose his job as part of a redundancy reorganisation and will never be able to prove anything.

So, the bottom line is.... realistically, how much does he want to keep his job?

Cerealfreak

zzzLazyDaisy wrote: »

Just to point out - OP's friend has less than 12 months service. This means that he has little protection under the law if he is dismissed.

If he objects to the pay cut, and is dismissed because of that, he can make a claim for unfair dismissal claiming that he was dismissed for seeking to rely on his statutory right) to be paid, in which case the 12 month rule doesn't apply. But the chances are he will lose his job as part of a redundancy reorganisation and will never be able to prove anything.

So, the bottom line is.... realistically, how much does he want to keep his job?

Which is fine in theory, but some people (one of the reasons I took VR) it wasn't financially viable for me to stay there on a paycut? At the time it was a valid reason for me and may well be for the OP.

Either way unfair dismissal under 12 months no coverage but it is illegal to dismiss on grounds of refusing to accept a pay cut and if he was sacked for that he would have legal recourse

lyndsey80

I rang ACAS - you can do the same for employments rights. My work asked us to either take a pay cut with reduced hours or buy extra holiday. I said I wasn't in a position to take either as I already had 2 jobs and I don't work all these hours for the fun of it!! They said ok, and that's that. They said they would introduce pay cuts to avoid redundancies - but guess what's happening now, 8 weeks later!!!
So, in short, your employer cannot make you take unpaid leave/reduce pay etc. You must agree to it.