Impact of a 10% pay cut?

slbhill

My company has just announced a 10% pay cut for all staff. (Could be worse, I'm not in any of the teams targeted for redundancies). In theory it's associated with a 10% cut in hours, equivalent to a 9 day fortnight but as a consultant I suspect I'll be under pressure to work the hours even if I'm not being paid for them. A consultation period is just starting but I very much doubt it will change the proposals.

After tax and national insurance I think this leaves me losing 9% of my take home pay each month. As a very straightforward PAYE person do I need to do anything about tax & NI or is it likely our payroll people &/or the tax office will just do it?

I need to look at how our pension contributions are structured but I'm sure there must be other things which will be affected. What else do I need to think about?

I may be spending more time browsing these forums to cope with the cut but it's not insurmountable, I hope.

Thoughts, personal experiences and suggestions all welcome!

shikoku

Set an immediate precedent that you will not be doing any unpaid hours. No ifs no buts.

dave4545454

are you on min wage? if so, a 10% cut would be illegal

SarEl

dave4545454 wrote: »

are you on min wage? if so, a 10% cut would be illegal

If this person is working as a consultant (which they say they are) and they are on NMW, one way or another they are the world's worst consultant! They'd have to be either very bad at their job, or very stpuid in not realising what consultants usually get paid

And a 10% cut is not illegal if, as said, the hours are also cut.

slbhill

No I'm not on minimum wage at least

I work in a transport consultancy - which means we get all the accusations consultants get but with not much of the pay. We're not paid much more (if any) than our council opposite numbers. Someone I know who is a computer consultant has an *hourly* charge-out rate about the same as my *daily* rate!

But the job is irrelevant to my original question: if my pay goes down by 10%, is it just tax & NI that go down or are there other changes too?

slbhill

shikoku wrote: »

Set an immediate precedent that you will not be doing any unpaid hours. No ifs no buts.

And that would gain me what? I lose the pay either way.

njo86

Yes, but you'd be working for free.

paulwf

Will any future redundancy packages be calculated on your old or new salary?

Personally I'd work to rule if hours and salary were being cut unless it is a short term option to help turn the company around. If everybody does 10 days work for the price of 9 the company has no incentive to ever increase hours again in the future.

Bob_the_Saver

njo86 wrote: »

Yes, but you'd be working for free.

Half the workers in the UK do unpaid work, most of the other half just think they don't. It's better than JSA

LittleVoice

slbhill wrote: »

As a very straightforward PAYE person do I need to do anything about tax & NI or is it likely our payroll people &/or the tax office will just do it?

The payroll people will apply the rules so that you pay the appropriate tax and NI for the pay you receive. Your tax code will not change.

ceridwen

paulwf wrote: »

Will any future redundancy packages be calculated on your old or new salary?

Personally I'd work to rule if hours and salary were being cut unless it is a short term option to help turn the company around. If everybody does 10 days work for the price of 9 the company has no incentive to ever increase hours again in the future.

I believe that redundancy pay (if it comes to it) is calculated based on the last 12 weeks pay? SarEl will doubtless correct me if I'm wrong on that length of time.

I do know that some firms are prone to cutting peoples hours for just long enough to be able to base redundancy pay on short-time working - rather than the actual payrate those people normally receive.