20% pay cut due to salary benchmark

[Covidpaycut]

Name changed for this.

I’ve been told I’m facing a 25% pay cut. The reason given is that my salary is higher than other people at my level (& higher than people at a level more senior to me). Officially I’m told that the firm (note this is a partnership not a company) isn’t performing badly. Some departments will be down due to Covid. Mine isn’t one of them. In fact we’re likely to be busy for the foreseeable future. Full disclosure though, my billings have been pretty quiet for the last few years.

Wondering what to do. I wonder whether this is a really stupid time to resign / claim constructive dismissal or whether just to keep my head down and leave at the first chance.

Any lawyers about who could advise as to whether this would be seen as constructive dismissal?

Mistype is it a 25% pay cut.

It’s their fault your salary level is what it is! If there must be a balancing act it would be much fairer to have you frozen out of pay increases for a few years.

Exactly right!

I know a good employment lawyer if you’re serious about suing but in your position I would be asking yourself how realistic is the possibility of finding another job with similar pay and can you afford to risk being unemployed.

What exactly have they said is the reason for the proposed pay cut? Any mention of asking people to take temporary pay cuts or just pay cuts in order for the business to survive? Have they given you options, i.e. what happens if you don't accept the pay cut?

I dont know if ACAS is open yet but give their helpline a call.

No idea of the legal implications but I’d be fuming about this! Do you think they might be quietly trying to force you out? Surely they wouldn’t want to demotivate someone into putting 25% less into their work.

I’d be looking about for new jobs pretty quickly (although appreciate its not the ideal time for that)

You could say you don’t agree to the reduction and force their hand. If they go ahead and impose it, you can make claims for unlawful deductions from wages while remaining employed by them as you had not agreed to the reduction. They may, though opt to dismiss you with notice and offer you re-employment on the lower pay but would need to be able to justify this decision if you decided to claim unfair dismissal. As an employee, it is usually ‘easier’ to argue unfair dismissal if you have been explicitly dismissed rather than claiming constructive unfair dismissal.

my former employer did a benchmarking exercise a few years ago to ensure equal pay for work of equal value and this is what I remember:

anyone who was found to be being overpaid was not given a pay cut. either their pay was frozen for however long it took for inflation pay rises to catch up colleagues with their level, or their line manager would try to find ways of giving them additional responsibility and autonomy to boost the value of their job role to catch up with their salary.

the assessments could also be modified by a "market value" correction if the official duties of a job role placed it at a particular level, but the scarcity of people qualified and experienced enough to do the role meant that it would be difficult to fill a vacancy at that salary level, then the role could be upgraded.

separately to that, if the performance of the post holder made them too valuable a resource to risk losing them to a competitor, then that was worth another grade hop too.

benchmarking in general should be focussed on looking for people who are underpaid and increasing their salary. unless there has been something unethical going on like nepotism, favouritism and the obtaining of pay rises through underhand means then you are unlikely to be actually overpaid. in which case it shouldn't take you long to secure a position with a competitor business at the salary you deserve.

EmperorCovidula thank you. That’s the rub of it. Even if a claim was taken and was successful - how long will it be before the market recovers. It’s also not that huge where I am.

Nydj thank you! I didn’t know that might be an option. Is there a law that supports that?

Turnedouttoes at a department decision level definitely not. At a board decision I don’t know.

wowfudge poor communication so I don’t know! Nothing has been said apart from benchmarking.

YinuCeatleAyru Thank you. This is extremely helpful! I think a number of those reasons would definitely apply for the original salary level. If the sector is busy post Covid then moving might be possible. But it’s a small market up here which makes life a bit trickier.

If you can afford the pay cut - and it is a big if - I would consider saying you will take the reduction, but want to move to a four day working week; compromises on both sides, the save on money, lose you for a day, but at least you win something.

My ex-employer went through this recently (a benchmarking survey) most jobs went up and were immediately awarded the pay rise. A few went down they had an appeal process and a few made it through the appeal process

Jobs that didn't win the appeal were to be frozen for three years and if that hadn't helped bring them into line with the pay scheme at that point the pay would actually be cut.

I don't think they can cut immediately without you signing a new contract?

My place of work recently did a similar bench marking exercise. As someone said above - no one had their pay cut. Several people had their pay frozen, which is what is normal. but an actual pay cut seems odd.

Having said that, I do know a couple of places which have brought in pay cuts across the board recently due to COVID-19 - could it be that kind of thing, but being justified with reference to bench marking?

milliechanf no apparently I am the only person that is being asked to take the cut. Maybe other people will be made redundant but I’ve not heard.

SciFiScream that’s very helpful thanks for sharing.

CormoranStrike I think that’s what is missing here - there is no upside. But maybe that would be an acceptable compromise.

Good luck @Covidpaycut let us know how it goes

@Covidpaycut

Nydj thank you! I didn’t know that might be an option. Is there a law that supports that?

Not sure which but of my post you are asking about but if it is about claiming for unlawful deductions, then yes, there is case law to support claiming unlawful deductions from wages by people who had continued to work but stated that they do not accept the change in their contract.

*bit

@Nydj thanks that’s what I meant. Appreciate it.

If they unilaterally impose a pay cut then that would very likely give you grounds to resign and claim constructive dismissal - however it does require you to resign, which maybe they know most people won’t do in this climate.

And what @Nydj said about unlawful deductions

I dont think by law they can cut your wage. So either a compromise agreement for you to leave or redundancy. Do not accept without a compromise.