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Employer wants to reduce pay of friend?


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A friend of mine has worked for his employer for over 20 years and is currently in the top tier of the pay structure for his job. For the last 18 months he has worked a four day week on arrangement with his employer due to a combination of his nearing his retirement age and ill health. He recently took five months off sick and was paid 90% of his wage thanks to his employer's sick pay scheme.

After a few weeks back his employer asked him to a meeting where they told him that they had reviewed his pay and want to reduce his current pay per hour and offer him a new contract for less money and did not provide a reason other than they feel that his current pay is too much.

 

Can they do this?

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Yes/No

 

No easy answer really as there is no one-size-fits-all response. If this represents a demotion from his position, then the employer can only do so IF there is a clause in his contract and IF they follow due process. It sounds very much like a capability issue, and the suggestion is that he is no longer able to carry out his role in the way that he should. In those circumstances the employer would be entitled to dismiss following a proper procedure whereby targets are given to improve attendance and/or performance and the ultimate sanction on failing to meet the targets would be dismissal on grounds of capability.

 

It may be that they are using capability to downscale his job - maybe in recognition of his long service and as an alternative to potential dismissal? Or is he currently being paid for 5 days work and only doing 4 - and if this is the case does the change in the rate of pay represent a 20% reduction?

 

If the employer is simply looking to cut his pay for no obvious reason, then this is a different matter. He has a contract, and any change would be a breach of that contract. If this were to happen without agreeing new terms, then any pay cut could be classed as an unlawful deduction OR your friend could resign and claim constructive dismissal at a Tribunal.

 

The tricky part is that ultimately the employer could terminate his contract and impose the new terms - it would still leave him able to claim constructive dismissal, but in offering a new contract the employer would be mitigating the damages to your friend which would restrict any possible award at a Tribunal.

 

There may also be possible claims for age discrimination

 

I would strongly suggest that your friend either seeks a proper meeting with a note taker, or makes a formal request in writing to establish what the employer is proposing and why. There are so many variables here that it is impossible to advise anything more without knowing those details.

Any advice given is done so on the assumption that recipients will also take professional advice where appropriate.

 

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is he in a pension scheme? If so he should look at the rules for that as it appears to me as though the savings they are trying to make are not really on the salary front but in the overall costs. Being on a lower salary for even a short time will make a massive difference to the pension rights so should be resisted.

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