BWF members such as yourselves frequently use our Member and Technical Helplines for assistance on a wide range of Employment, Health and Safety, Pay and Technical issues. For the next few weeks, we’re putting up a frequently asked question every Tuesday in order to help members and illustrate the type of advice we are able to provide. If you have any questions that you would like to see featured, we would be happy to assist. This question and many others like it can be found in our Question Centre. If you want further advice on any of the issues, don’t hesitate to ring the helpline or browse our extensive publications library, which includes our guidance for making redundancies and the BWF Employee Handbook This week: Can I impose a pay-cut or reduction in hours? In the current economic climate, many employers are finding they are staffed at the appropriate level (therefore there is no redundancy situation) but they simply cannot command the fees they were able to prior to the recession. In these circumstances, a reduction in pay across the board may be the only solution (or a corresponding decrease in hours required to work).
Other businesses are however consulting with staff regarding the possibility of agreeing pay cuts rather than having to start a compulsory redundancy programme. In the present economic downturn many employees will be more than willing to agree to options that in other times they would have flatly refused. However, it is not possible to rely on a majority vote to impose pay cuts or hours reduction on all employees. In the absence of any express contractual right to reduce pay it is important that employees individually agree before such a material change in the employment contact is imposed. If some employees do not accept the change and you unilaterally impose the pay reduction there will be a clear risk of claims for unlawful deductions from wages, breach of contract and constructive unfair dismissal.
Therefore, the employees who refuse to consent to the pay cuts have the contractual right to remain on their current level of pay. However, in practice, if the majority have consented and are now receiving lower pay (or working fewer hours) to avoid redundancies it would not be acceptable to have a few fellow workers doing the same job for higher rates of pay. Apart from any potential legal issues this is likely to cause considerable staff disruption and ill-feeling. It may also not achieve the savings you require.
There is a potential answer regarding an employee who refuses to agree to the pay cuts or a reduction in hours, however.
On the basis of a reasonable business case, after consultation you could dismiss them and offer immediate re-engagement after they have concluded working their notice. The terms of the new contract will reflect the lower pay that has already been agreed by the others. The dismissal being carried out in the course of changing terms and conditions will be for ‘some other substantial reason