It is prudent for employers to exhaust as many options as possible before resorting to redundancies.
Since the objective is to reduce operational costs, temporary measures that may be considered are to reduce salaries, commonly called pay cuts, or suspend certain benefits for a period of time
This option has benefits to both parties. Employers are assured of a capable workforce ready for deployment once the situation improves. Employees on the other hand are assured of jobs and some income during a tough period and indeed feel valued that their service is still considered critical despite the challenges.
That said, employees do have rights that they can exercise if austerity measures entail a pay cut.
The Employment Act has no provision for pay cuts. The only situations where an employee’s pay may be altered arise from surcharge that may emanate from disciplinary processes.
This, therefore, means there has to be an agreement by both parties to alter a salary that has already been effected.
If you have been approached to consider a pay cut you can exercise your rights as follows:
You can choose to accept or decline the request. Either choice has consequences
Declining means you do not want to be part of your employer’s efforts to minimise costs and secure jobs, which is as good a saying you are out.
We will talk about your separation options in a later instalment.
If, on the other hand you accept, these are the requirements your employer needs to fulfil.
The most obvious one is to issue you with a letter stating the reduction to be effected. The letter should state clearly the effective date, and anticipated date when regular salary will be restored. You must acknowledge and accept the changes for this to be binding.
Once a pay cut is effected it has a ripple effect on other benefits like pension, bonuses, gratuities and any other benefit pegged to your salary. Your employer must state what happens to your “cut” salary and benefits when optimal business resumes.
Responsible employers repay in form of gratuity once business resumes or just pay it back immediately business picks up.
Ensure your employer confirms in writing the salary to be applied when calculating your dues in case of redundancy during this period.
Whereas the standard is to use the last salary to calculate severance pay, ensure that your payment in this regard is pegged to the salary paid to you before the pay cut.
But there are other options that employers can apply after pay cuts before declaring positions abolished.
Tomorrow, we will talk about your rights as an employee during unpaid leave.
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