Employment News Stories
Pay cuts in 2011?
4/02/2011Jonathan I'Anson, Employment Partner at Brabners Chaffe Street warns of another year of uncertainty in the workplace.
The scale of public sector cuts and potential redundancies is now becoming clear.
In the private sector some employees will undoubtedly face pay cuts. A recent British Chamber of Commerce survey revealed that whilst 49% of employers in the private sector plan to freeze pay, 6% of employers actually plan to reduce wages this year.
Whilst it is possible for an employer to reduce pay without the agreement of staff, this approach is fraught with legal difficulty. If an employer unilaterally reduces the pay of an employee, the employer will in most cases be in breach of contract.
If employers get it wrong they can face claims for breach of contract, constructive unfair dismissal or claims for unauthorised deduction of wages. Defending such claims is expensive and a tribunal or court can make an award in favour of an employee.
For employers, getting it wrong can therefore result in an increase in business costs at a time businesses can ill afford them.
However, our experience at Brabners Chaffe Street is that employees are perhaps more likely to agree to “austerity measures” than employers might anticipate. After all, in the current climate, most people would rather suffer some short term loss of income than lose their job.
For further information contact Jonathan I'Anson at Brabners Chaffe Street on 0151 600 3159
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