Asked to take a salary reduction

[Chipsahoy]

Help!

Currently I am a shareholder and owner of a business. There are five of us. I am the only one who also takes a salary as I manage the business.
Business is doing just fine but partners have decided they aren’t getting enough pay out at the end of each year so want to reduce my pay to allow money to go further.
They are all going to vote for this next week.
Do I have any rights? I disagree with the position and this will mean I cannot pay all my bills.

The business is Uk based but the partners all live outside of the Uk. I am British.

If they all agree they will just outvote you. Could you look for another job?

Get another job, resign, see if they can find someone on the reduced pay.

Say you'll reduce the work you do in line with the pay cut. Up to them to cover the gap.

I don’t know the legality however, I will strongly be telling them what roles of the business management they will be taking over.

Depending on the salary reduction tell them someone will need to do x, someone else y and someone else z

Please let me know who I can redirect these emails/ business calls etc etc too

They want you to work and pay them

Already job hunting but it takes time.

Are you a director and shareholder? What about others?

Do you take dividends too, or just your salary?

New company. Yes director and shareholder. Two and half yrs. No one has taken dividends yet. I get a salary, we all have an equal share. They don’t take any money as none of them do any work. I manage the company and employees.

I assume none of you are doing this as a hobby and therefore, it simply sounds like the business is not bringing in enough profit to make it sustainable for so many people. How many shareholders/directors are there that are getting an income from the business?

Edit: Cross posted with your most recent reply, OP. It sounds like after 2.5 years, they now want to see some income. If their only idea for making that a reality is to cut your salary and share that slice of the pie between three instead of one, they are going to kill the business off quite quickly.

Let them buy you out, wait 6 months and set up the exact same business and run it the way you want.

I am a bit rusty so happy to be corrected but I think as you are all directors they are able to reduce your salary, especially as there may be a business need for it?

I would run it past your accountant if possible.

You say the other directors feel they aren't getting a big enough return annually but then say that no-one has actually taken any money out yet? How tight are the margins at the company, is it profitable? And realistically how much is it going to improve matters if they are proposing that your salary reduction be divided amongst four of them?!

Thank you all for your help. I’ll speak to my accountant.

Sell your shares to them and see if they can find someone to do it on the proposed pay. Or keep your shares and become silent partner and hire someone at your salary and find another job

Are you an employee, receiving a salary?

Is your salary in line in excess of market rates?

Just to add, lots of new leads coming in. It was never going to make a lot at first but we’ve made a profit both years just plunged money back into company. It was always supposed to be a ten year plan. One of the shareholders fancies doing up her spare room…

If you have an employment contract and stated salary then no they can't just unilaterally reduce it (although they could just sack you since you've less than two years' service)

Don't work for dodgy offshore types is my advice

They aren’t dodge offshore, they are Irish! And were friends.

You say you are a director and shareholder.

You refer to the others as shareholders. Are they also directors? You haven't specifically clarified this point . If not they don't get a say in operational details including your salary.

If they're running a business in the UK and extracting profits out of the UK they're dodgy and offshore.

They aren’t directors.

Do you have a contract. Sounds like you have two relationships - one as shareholder and one as employee. They can’t just unilaterally change your contract. Ring ACAS and ask for advice. The most sensible thing would be to either work together to increase profits or everyone take a share of the workload and the profits, and you find another job. But they need to follow due process.

Op has no enforceable rights in terms of process at the moment (aside from discrimination protections)

Like the way she wants money to do up her spare room. Taking away from the person doing the work. How far removed from the UK are these people? Do they know prices are going up quickly and salaries should go up not down?

I would now do the bare minimum and concentrate on your job search

If one of them needs cash and there is cash in the business, they can take that out as a loan to be repaid from their future dividend payments.

Or that one shareholder sell their stake to the other shareholders/someone else?

Are you being paid above market rate for what you do? How much money are they looking to reduce your pay by and how much cash will that give them when divided between shareholders?

Have you and they looked at other ways to maximise net profits?

They seem to have changed their mind on the 10 year horizon view. Unless your pay is higher than market rate, I think they are being unreasonable. You do have employment rights.