Pay Cut

dontknowwhattodonext

My employer is suggesting I take a pay cut from 50k to 40k from 1st Jan, Our finincial year is from 1st June to 31st May, so this is half way through the financial year, as my monthly pay has been based on 50k, I presume my monthly pay would go down a lot as would not be based on 40k, but the difference, is this correct?

MikeJXE

So you are considering a pay cut of 20% when the country workforce are looking for pay rises. I guess if it's a genuine request your company could be in trouble. 

Andy_L

Depends if they mean it as a pro-rata deduction or across the entire year.
I would have thought it would be going forward (ie you'd get 25k for the 1st half & then 20k for the second half and then 40k pa going forward but the only people who can tell you if they meant as a pro-rata reduction or not are your employers

baser999

Regardless of the companys financial year, surely what they’re saying is that with effect from 1 January your monthly gross will be £3333 as against £4167 that you’ve been paid previously. A drop of £834 which allowing for the decrease in tax/Nic you’ll be paying is going to leave you with possibly £500 less in take home (just a rough estimate)
Have they explained why they’re proposing this decrease? If it’s to save the company, how attached are you to it?

Marcon

dontknowwhattodonext said:

My employer is suggesting I take a pay cut from 50k to 40k from 1st Jan, Our finincial year is from 1st June to 31st May, so this is half way through the financial year, as my monthly pay has been based on 50k, I presume my monthly pay would go down a lot as would not be based on 40k, but the difference, is this correct?

Ask your employer - but it would be highly unusual to 'backdate' a payout, which is effectively what would happen if they are seeking to ensure you receive a total of £40K by 31 May.

Is this the same company which the MD was thinking of closing last year: https://forums.moneysavingexpert.com/discussion/6238237/company-closure#latest

If so, the idea that the company is 'viable' is looking increasingly unlikely.

TELLIT01

Put forward the suggestion of a temporary reduction until the company finances improve, with the conditions that pay return to the pre-cut level and the 'lost' wages are paid over an extended period.  If they baulk at that idea it suggests they don't think they have a long term future.

74jax

What is the reason? Would it be a contract change? It would affect notice pay, redundancy pay, pension payments etc. 
Is everyone having this 'suggestion'? 
I'd say no personally and look elsewhere. 

dontknowwhattodonext

Thanks for your replies, it is only me, the MD feals I am being overpaid, yes they want me to receive a total of £40K by 31 May, £40k works out at around £500 less per month, but no idea how this works changing half way through my contract

GiantTCR

Do you agree that you're being overpaid?

Would you be happy with a 10k paycut?

How quickly can you find another job?

dontknowwhattodonext

Not really but have made a couple of mistakes which the MD would not expect on a high salary staff member, not happy, I will look to see what is available, but having been at the same company for over 20 years, is a big decision

GiantTCR

dontknowwhattodonext said:

Not really but have made a couple of mistakes which the MD would not expect on a high salary staff member, not happy, I will look to see what is available, but having been at the same company for over 20 years, is a big decision

That's also why the MD has the guts to ask you to take a pay cut.

They know that the longer you stay employed in one company and the harder it is for the employee to pull the plug and move somewhere else. Also, staying at the same company for a long time makes you a bit less employable and less appealing in the eyes of potential new employers.

I'd still look for a new job. 10k is a quite significant pay cut.