Recently, I've been to a gathering and learnt from alot of my friends that their companies are retrenching staffs and those who stays on will get their salary cut.
The question I have today, is whether a paycut do help our career?
A company may ask its employees to take lower salaries to keep the organization afloat or to avoid massive layoffs. I find that the alternative is often having no job at all.
Former Yankees manager Joe Torre said at a press conference, “The fact that somebody is reducing your salary is just telling me they’re not satisfied with what you’re doing.”
Business may has slowed around your office. Well, at least you still have a job. But you will also learn that your salary is being cut.
Do read on when it comes to pay cut issues: (Abstract from Web)
Make No Accept-ion
-When your supervisor breaks the news to you about your pay cut, do not accept anything immediately. In other words, refrain from conveying any type of agreement, either verbally or in writing. If pushed, you may say something to the effect of "This is a lot to process right now. I need to think about this and discuss it with my family this evening."
What you want to do is buy yourself some time. Why? You need to find out all the facts surrounding a salary reduction before you accept it. A pay cut can affect your future severance package and compensation for unused sick or vacation days as those numbers are usually calculated based on your current salary -- as are unemployment benefits. Also, the reduced compensation could affect salary negotiations with future employers as your last salary of record could be significantly less than what you are really worth.
Questions to ask your superiors include:
- Is this a mandatory or voluntary pay cut?
- How much will your pay be lowered by?
- Who else is affected by the pay cut?
- How long will the pay cut last?
- Could there be retroactive reimbursement?
- How will this affect raises, bonuses and benefits?
- Are you going to have to work longer hours or take on additional tasks?
- What are the company's plans to turn things around?
Questions to ask yourself include:
- How much do you need this job?
- Do you have faith that the company will recover from this setback?
- Can you trust what your superiors are telling you?
- Is it time to move on?
- After gathering information outwardly and inwardly, you may want to speak with an employment attorney to explore all of your legal options and your rights.
It Pays to Negotiate
- Once you know the facts and think you may wish to continue at your current job, see if you can negotiate to make the pay cut more palatable to you.
- Some areas to negotiate can include your weekly hours and where you work. Suggest a reduced schedule, such as a four-day workweek. Or try to arrange to telecommute to reduce your commuting costs.
- You can also negotiate around stock options, if you still believe the company is viable -- and valuable. If you don't have any stock options, ask for some. If you have some, try to get more.
- Finally, ask the company for a written agreement around the salary cut, when your old pay rate might be reinstated and if there will be any recompense for lost wages.
Exit Stage Left
- Because most people are employed "at will," you or your employer can end the arrangement at any time and your salary can be lowered, as long as it is done for a legitimate business reason. But, if your pay has been cut by an unreasonable percentage, you may be able to quit and still collect unemployment benefits.
- If you have an employment contract, you may be able to refuse the cut altogether or at least quit and collect unemployment, but only if the contract states terms of compensation and says that your employer cannot alter the terms without your consent. The pay cut could constitute a breach of contract
- Finally, you can temporarily agree to the pay cut, update your resume. Begin applying for new jobs immediately and look forward to the future with a different employer.
2 comments:
Janice, Loved your post. The questions that you have listed here to ask the supervisers and to those who are being offered a pay cut are very thoughtful and well said.
This is a very relevant topic and I often support the pay cut as oppoed to job loss especially in the current situation when there are not many jobs around an if you have a family dependent on you.. but of course first a good evaluation and reserach is necessary before you say yes.
Good points!
Shweta, your comment is extremely relevant during these troubled times. Thank you.
However, one key issue that we must be mindful of about paycuts is that it is fair. In other words, employers have to be realistic in their paycuts and apply the ratios across the board for the company. For example, pay cuts are fair if the largest salaries take the largest percentage of cuts with the lower wage earners deriving a smaller percentage in cuts; the worst situation is where the rank and file suffers but the upper levels still enjoy the benefits. In addition, we must also be cognizant of whether the paycuts are realistic because merely cutting salaries without a strategic plan is like a boat going through the water without a direction. Ultimatlely, a pay cut saves jobs but it must also be practical or the end result is the same, no jobs for all.
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