How Should You Handle The Situation
Have you been asked to take a pay cut because of the coronavirus situation? Make sure you know what you are agreeing to before you reduce your pay.
Firstly, check your contract. Your contract probably specifies the minimum hours that you are entitled to. Check if an award or enterprise agreement might apply to your employment. That agreement or award might say that an employer cannot change your hours of work without them consulting you first.
During this process, you should check your current leave accrual levels and whether you preserve that leave accrual at your current rate of pay. If the focus is on job retention, you should understand what you can do and how much of a cut you can tolerate.
The pay cut process has to be done in consultation with you. You cannot be forced to accept that arrangement. Once you are prepared to accept this arrangement, make sure that it is in writing so that everyone understands that this is all temporary and you can agree to the preservation of your current entitlements at a pre-cut rate. You don’t want to agree to a pay cut only to be made redundant in a couple of months’ time without those entitlements in place.
If you want to keep your job, your employer may not have any choice about this and the alternative to a temporary reduction in pay or salary is redundancy. It is sensitive to negotiate whatever pay cut or salary that you can stand that is fair in the circumstances.
What Does a Pay Cut Look Like on Paper?
If your employer is looking to do a pay cut, they’re probably going to have a template letter that states the terms and conditions of the pay cut. This letter should be temporary variations to your contract of employment. All other terms and conditions of your employment should remain the same. There should be an end date or at the very least a consistent review date about the extent of the pay cut.
This letter should ideally outline the following rights and entitlements: “In the current circumstances, I am prepared to consider a temporary reduction in my pay or salary. This is what I’m prepared to accept. From this date, all of my entitlements up until now remain the same. I reserved them all at the pre cut rate. And if my employment ends during this temporary reduction period, then we agree that any entitlement to notice or redundancy pay is to be calculated in accordance with my pre cutting entitlements.”
Next Steps
Resolution123 have created a template letter that you can take to your employer. Join our Facebook group today to get a copy of this template.
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