Impact of a 10% pay cut?

DevilsAdvocate1

The company my husband works for made a 10% salary cut across the board last year to get it out of a hole. The company was losing money and the bank would not lend anymore. It was take a paycut or the company goes bust. However, the pay cut was always for a scheduled period of time with a date set for when it would be returned. In fact, its just been announced that they are reinstating the original pay from next month - 6 months earlier than the original date.

His company actually gave a choice - 10% paycut or forgo the pension contribution. We also found that he did not lose as much as we thought he would as the cut brought him below the 40% tax limit, so he was paying less tax.

D.

shikoku

ceridwen wrote: »

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.

This happened to me after working full time for six years, it halved my redundancy package.

slbhill

shikoku wrote: »

This happened to me after working full time for six years, it halved my redundancy package.

Eeek! That's a very useful thing to bear in mind, going into the consultation period - thanks guys!

getmore4less

slbhill wrote: »

Eeek! That's a very useful thing to bear in mind, going into the consultation period - thanks guys!

Fight in the consultation for a time limit on the pay cut and try for paid overtime.

I would also try to make the cut a full day rather than shorter hours which will just tend to go back up.(allthough this can impact holidays)
Use the cuts travel costs argument.
If asked to work the day then there needs to be pay or extra time off at another time

If they agree to this try to get any cannot work elsewhere clauses suspended so you can at least try to find some work on the extra days off.


What are the alternatives?

Might be that some would welcome redundancy

bristol_pilot

If this is a permanent pay cut, then I would see this as an opportunity to see if you can get a better job elsewhere. Meanwhile you will be getting 90% of what you previuosly earned so there is no great urgency and you can take your time looking for that career move. I wouldn't stay long term with a firm that cut wages by 10%; it might be 10% this year, then another 10% next year and another 10% the year after that...then bust as the most productive employees will have gone by then. Ultimately cutting costs alone is not an effective business strategy except in the very short term. There may be millions of unemployed lining up for unskilled jobs, but there is still a market for professionals with significant experience.

slbhill

bristol_pilot wrote: »

If this is a permanent pay cut, then I would see this as an opportunity to see if you can get a better job elsewhere.
...
I wouldn't stay long term with a firm that cut wages by 10%; it might be 10% this year, then another 10% next year ...

I see your point - but you'd struggle to find a job in our sector on that basis. As far as my colleagues & I can work out, all of our competitors have had similar cuts already, and pretty much nobody is recruiting. Perhaps it's a sign that we should be looking for a new career path... if there are any reliable ones left these days!