Pay Cut during COVID-19, is it legal?

LazyOtter on 19/03/2020 - 16:26

Hi all,

So my CEO just announced there are possible staff pay cuts in the month of May, after senior management has their salaries cut in April to keep the business afloat during the pandemic. Pay cut is in the range of 20% to 40%.

Just wondering, if that's possible in a legal stand point for the company to force a pay cut on staff members? and if i can protect myself from the pay cut?

Company background
Service-based (so depended on customers/clients, which have promptly cutting their own costs in the last few days).
Although it may seem dire, CEO has re-assured staff wont be let go or made redundant. but in my opinion a skeleton crew is enough to keep the company running.

thanks for any assistance.

Education & Work COVID-19

Comments

  • spackbace on 19/03/2020 - 16:30
    +36

    Would you rather less pay, or no job? Because that could happen

    • outlander on 19/03/2020 - 17:36
      +20

      How about less pay, then no job?

      Because that can happen too.

      • Nugs on 19/03/2020 - 18:04
        +1

        including the redundancy?
        .

        • Kangal on 19/03/2020 - 22:21

          Sorry to hijack the thread, but a similar case is happening to me. Advice anyone?

          TL;DR - What is the best way to communicate about my payslip due to COVID-19 related scare?
          I wasn't a suspect but was forced to take a week off, and they're refusing to pay using sick leave.

        • Kangal on 19/03/2020 - 22:22
          +1

          And here's the LONG STORY (apologies):

          I work for a REDACTED company, which I have only started with two months ago.
          On Sunday night (10pm) I had a runny nose, went into work in the morning, and was told to go home due to coronavirus scare. It was an over-reaction because it wasn't a major illness, nor suspect. I haven't travelled overseas, come into contact with anyone known to have it or suspect, and didn't have any of the symptoms (cough, short breath, fever). Not to mention I have been a little recluse lately.

          They asked me to see my GP. GP said I'm fine, gave me decongestant, sent me away. Work asked me to get tested for Coronavirus. Queensland Health and my GP both said it is not possible, because I do not meet the criteria for testing. I relayed that information. I was told to take 2 days off anyway, and resume on Thursday, so as to monitor if symptoms do developed. Monday, plus 2 days passed, and there were no symptoms developed. I got prepped for work, and sent a friendly text to my manager that I am fine, didn't have any symptoms, and asked if I can start today. He thanked me, and said he needs to get permission, so kind of going back on his word. Called me a couple hours later and asked me to get a certificate from GP saying I was "fit to work". I went in, and the GP said they cannot do that, as its an immense legal liability and affects their medical insurance… but said they could give me a certificate that said I was not a suspect for covid-19. I got the certificate, and sent a photo of it over, and he said its satisfactory. Since half the day had passed waiting for them, I asked when I can start work (today?). He said he will have to get back to me (checking with his manager). He eventually got back, and asked me to start on Monday. I said "no worries" but if he can keep an eye on it, so I don't get my payslip docked. I told him I have a couple expenses that I need to make, so its important. So that he can put it all as "sick leave". I said, I wouldn't have accrued enough sick leave yet, so to just use my "future sick leave" which is something many workplaces resort to at times. He said he can't do that because it's company policy. He said he can organise a meeting with me and his boss to discuss it. I said sure, and he's arranging something for Tuesday.

          Now, even though I wasn't a threat or really sick, I showed courtesy and made the exception for them, without any hesitation. I'm not looking to rip them off, but I don't want to get ripped off either. Wasting sick leave is a disadvantage for me, which was created by their decision making and not mine. Getting paid regular time but not working is a disadvantage on them, yet was a scenario created by them. I believe using (future) sick leave for these days off is a fair and reasonable compromise. And if it is their company policy, then I expect them to give me an exception, just as how I made an exception for them. I believe that I acted responsible, but shouldn't be punished for it.

          I think if they still deny that compromise, and cut my payslip short, I won't have any option but to accept their outcome. However, it shows how cheap and immoral(?) they are, especially in a time of need. So in the future I will not be eager to do any favours, or go out of my way for them. In all my other jobs I've left while I had accrued a buttload of sick leave (which doesn't get paid out), since I rarely used them. So far, I have been a "good worker" by coming in early and staying back. We've had Crunch Time due to high output (pharma industry is going bananas lately). Speaking these out-loud makes me sound like an askhole, so what is an effective way to do so without sounding like an askhole?

          • [Deactivated] on 19/03/2020 - 22:32

            @Kangal:

            just use my "future sick leave" which is something many workplaces resort to at times. He said he can't do that because it's company policy

            I think you’d be hard pressed to find that the company has any legal obligation to do this. Most companies I’ve worked for don’t allow negative SL irrespective of circumstances. You could always ask for the days to be paid as AL to the extent you have any accrued.

            • Kangal on 19/03/2020 - 22:45
              +1

              @[Deactivated]: Personally seen it happen plenty of times.
              Never needed special treatment myself as I've always had heaps of SL and AL accrued. Since I'm new to this company I haven't accrued much yet. Which basically means a week of no-pay, that they decided, without acknowledgment from me.

              There were a couple bad actors who seemed sick, or at-risk, and they continued working. Whereas I took it more seriously and complied, even though I was not a suspect. So they get to endanger and work and keep their SL/AL, but I'm the one that forced to take a loss? Doesn't sound fair.

              Normally, I'd get pissed-off but take the bad with the good. This instance, it's come at a really bad time financially. I've got some big expenses, and my savings have dried up. So it feels like I'm betraying myself if I don't say something. I don't know if that sounds crazy?

              If I do have a chat, how would I convince them?
              PS: Thanks for the reply.

              • [Deactivated] on 19/03/2020 - 23:00
                +1

                @Kangal: That’s a terrible situation and unfair.

                Next time it happens I’d insist on work from home arrangements.

                But for the discussion at hand you can only really explain how bad your situation is to your line manager and see if he can get approval from above for an exception, or potentially see if there are unrelated things they could help you with eg I asked my boss for professional membership reimbursement about $1k, he said can’t do he doesn’t get it either, but he gets a phone reimbursement and he can arrange that for me instead.

          • deveshwar0 on 20/03/2020 - 00:16
            +17

            @Kangal: Mate, I'll give you my honest opinion.
            For someone who is 2 months into the job, probably with a probationary period, I'd let it slide and have unpaid leave.
            There will be a time where you'd be able to tell them to get shafted because of the treatment they have afforded to you but now is not that time.
            Specifically with businesses finding it tough and uncertainty all around.
            Just my 2 cents.

            • Belgarath on 20/03/2020 - 10:15
              +1

              @deveshwar0: 100% agree. Cause waves and you may find your probation is ended and out of a job.

          • [Deactivated] on 27/03/2020 - 14:40

            @Kangal:

            GP said I'm fine, gave me decongestant, sent me away.

            Did you provide a medical clearance from your GP?

            Work asked me to get tested for Coronavirus. Queensland Health and my GP both said it is not possible, because I do not meet the criteria for testing. I relayed that information. I was told to take 2 days off anyway,

            Did you ask if you were going to get paid for those 2 days? I would have confirmed in writing that it will be leave with pay or WFH arrangements before agreeing to this.

            • Kangal on 27/03/2020 - 23:26
              -1

              @[Deactivated]: Yeah, I got a medical clearance from the GP.
              I sent a photo through my phone, and got the all-clear shortly after from the manager.
              He got back to me a couple hours later, going back on his word, and telling me to start work on Monday instead.

              The manager doesn't have much say, and he's stuck relaying info between myself and His Manager.
              And pretty much half the company doesn't like His Manager, apparently (I'm new, and not in the same building). So I shouldn't be surprised by his dodgy attitude and practices.

              It's looks like they owe me a week's rent, and I shouldn't have worked, and also not lost any SL or AL. According to Fairwork here, and here. Just paraphrasing it, but:

              "Employer cannot direct an employee to use Annual Leave, other than Christmas/New Year when business is closed. Or employee has accumulated excess Annual Leave."

              "If employer wants their employee to stay home/stood down as a precaution - yet employee is ready, willing, and able to work - the employee is entitled to be paid."

              "Under the Fair Work Act, standing down employees without pay because an employee has coronovirus is not available"

              ………………………
              As an UPDATE, I used up all my accrued leave, which amounts to ~3 days of pay. I'm missing ~2 days of pay coming on my next payslip. I have no SL and no AL left. And am behind in payments for things (rent, rego, insurance, internet, electricity) as they all came in the same time.

              So yeah, I got shafted. And in a time of need. Not to mention that it was against the Fair Work Act.

              However, I'm swallowing this bitter pill to keep the pay coming. While supporting my external family, and being taken advantage of on other fronts. Not to mention I'm also busy studying. Hopefully I can make my career jump after a year, and cut-ties to people ab/using me. Then I will definitely not hesitate to quit working for this company, so I can look at the positive from that viewpoint. Maybe someday I can afford a High Yield Investment? One could dream right?

              • [Deactivated] on 27/03/2020 - 23:30
                +1

                @Kangal:

                got the all-clear shortly after from the manager.
                He got back to me a couple hours later, going back on his word, and telling me to start work on Monday instead.

                Was all this in writing?

                • Kangal on 27/03/2020 - 23:52

                  @[Deactivated]: I have it in SMS.
                  But it was repeated to me on the phone.

                  edit:
                  It's basically one manager taking advantage of employees, and the middle-manager not fulfilling his responsibilities…. basically what they call "passing the buck".

                  • [Deactivated] on 28/03/2020 - 00:04

                    @Kangal: Unfortunately, this is extra ordinary circumstances and like you said, it's best to swallow the pill :( I would save that txt msg though. It might come handy someday.

  • boomramada on 19/03/2020 - 16:30
    +7

    So you prefer them to go under, so none one get to work?

  • GG57 on 19/03/2020 - 16:30
    +11

    Someone posted this on another forum:

    Under the Fair Work Act, any employee (whether full-time, part-time or casual) can be stood down without pay if they can't do useful work because of an "equipment breakdown, industrial action or a stoppage of work for which the employer can't reasonably be held responsible

    • LazyOtter on 19/03/2020 - 16:45

      thanks

      some reason i found for those qantas staff that will be let go. sad.

      • jimbobaus on 19/03/2020 - 18:54
        +7

        Stood down not let go.

        • Hardlyworkin on 19/03/2020 - 20:58
          +2

          Qantas was specific though as there is a government requirement to stop flying in foreigners and hence a stand down as the lack of work is due (in part) to this. Not having customers is genuinely not a stand down scenario.

  • iampoor on 19/03/2020 - 16:38
    +12

    Your company is trying to spread the pain across all so that everyone can keep their jobs.

    I imagine that you are in a position where you think you will fit within that skeleton crew and you are happy for others to lose their jobs so that you won't have to take a pay cut?

      • iampoor on 19/03/2020 - 16:59
        +5

        Well, if your not happy for anyone to leave then take the pay cut and not make things difficult for them.

      • Donaldhump on 19/03/2020 - 17:26
        +11

        everyone's replaceable.

      • bobbified on 19/03/2020 - 18:53
        +2

        everyone thinks that… until they get a redundancy letter!

    • Donaldhump on 19/03/2020 - 17:25
      +12

      yes but companies never spread the wealth when times are good…. that's the diff

  • atris17 on 19/03/2020 - 16:48
    +10

    You options

    • Option 1 - Pay Cut, and keep the household cashflow going.

    • Option 2 - NO Employment, and competing to find a Job in a Market with a lower wage, "if" there still any business employing.

    • Option 3 - Argue against the paycut collectively ,company falls, all of you unemployed and back to option 2

    This is going to be the first recession in 29 Years, it going to be painful.

    • LazyOtter on 19/03/2020 - 16:55
      +8

      i came to the same conclusions.

      option 1 is the sensible choice.

  • CyberMurning on 19/03/2020 - 16:57

    pay cut or job cut? your choice

  • CyberMurning on 19/03/2020 - 16:57
    -2

    or…

    bikies

  • Donaldhump on 19/03/2020 - 17:02
    +2

    option 1. take no pay cut, get a redundancy
    option 2. take pay cut
    option 3. take a pay cut, in return for shares in the company so when times are good again you get rewards
    option 4. take a pay cut, in return for an equivalent pay rise again for an equivalent period when times are good, and to be pay put if terminated before that
    option 5. take pay cut, and cut your hours proportionally
    option 6. take pay cut, and sit in dunny the same hours proportionally

    they cant force it on you they are asking you, and the senior management would all have 3 or 4 negotiated above, but wont tell you, and when times are good again they wont care for you, so id go 3 or 4, then 5

  • Choc83 on 19/03/2020 - 17:08
    +8

    negotiate unpaid leave. A 20% pay cut is equal working 4 days a week instead of 5. This way you don't compromise your 'full time equivalent' pay.

    • serpserpserp on 19/03/2020 - 20:13

      I think this is what will happen. Everyone will just work 4 days a week. It is much easier to alter this way.

  • orangetrain on 19/03/2020 - 17:11

    As much as it's unethical, you can tell them you refuse the paycut. But you will need to get a new job when times get less hard.

  • chumlee on 19/03/2020 - 17:37

    If any good can come ut of this corona virus, it's that governments will provide better protection of workers rights instead of this shite casual & gig economy rubbish that forces people to continue to go to work when sick

    • Sawtell on 19/03/2020 - 17:47
      +1

      Im pretty sure the Australian Retailers Association has already come out and said the exact opposite - "…while not the right time to discuss industrial reform…" They will be asking for less employee safeguards.

      • thatonethere on 19/03/2020 - 17:59

        More government bailouts for when the economy doesn't go our way…

    • stratbargain on 19/03/2020 - 18:16
      +1

      Plenty of people are going to be without pay/without work in this situation. It's completely (profanity). But I don't agree with more protections for employees. What about employers? It's 100% not their fault and they are going to get screwed royally. If anything the government needs to look at benefits, universal income for all etc.

      • ProlapsedHeinous on 19/03/2020 - 18:20
        +1

        one could argue the employers should have their own "rainy day fund" as well as their employees. either way, shit position and I wish everyone the best in these trying times.

        • stratbargain on 19/03/2020 - 18:22
          +1

          Although looking like this time around they may require a rainy six month fund…. Crazy, crazy times

      • chumlee on 19/03/2020 - 18:29

        When workers do not have adequate employment protections, they will go to work with coronavirus cause they need money.

        End result is virus spreads faster, businesses collapse and millions become unemployed.

        Businesses that can only survive by underpaying staff or breaking laws, don't deserve to be in business

  • Ocker on 19/03/2020 - 18:53

    To be sure - this current situation is bringing out the greed in a lot of people. In other words be thankful you have(may have) a job - many thousands will not

  • TheMindsetTraveller on 19/03/2020 - 18:58

    We are in very very interesting times.

    Everyone has a 'price'.

    If you take a 40% paycut and had debts to service you could be screwed. You might end up losing your home if you failed to pay your mortgage as an example, similarly if you lost your job due to your company going bust.

    If this coronavirus-mania-shitstorm continues for many months, more people would be in financial hardship and start thinking … "I haven't died yet but I can't pay the bills, and I might even lose my home."

    Back to everyone has a price, this is exactly what it is.

    Life is about weighing your own personal comfort level vs risk level, and everyone will have their own levels and it is all correct. What works for you, may not work for me and vice versa.

    For now, I still believe this coronamania has been massively overblown, that the fear level is out of this world, and I think most of us will be OK from it. And you know what my opinion is correct, and you might think differently and your opinion is also correct.

    We could go to a Justin Bieber concert together, sit side by side, watch the same show .. and you might hate it, and I loved every second. Was any of us wrong? Of course no.

    • BinaryPirate on 19/03/2020 - 20:09
      +1

      No one's suggesting most of us won't be okay from it. It's a question of doing everything to protect those who won't be ok. Perhaps you're okay with sacrificing the old, the very young & the immuno-compromised. Unsurprisingly, most people aren't.
      There's also the issue of it mutating into something worse the longer it's allowed to spread, as viruses do, and so on.

      Unlike a Justin Bieber concert, airborne & contact viruses have the potential to kill millions of people before a vaccine can be developed. Viruses don't gaf about your opinions.

      • TheMindsetTraveller on 19/03/2020 - 21:43

        I totally agree with what you are saying and I am not saying to anyone to skip excellent hygeine or self isolation etc for the greater public good.

        My point is sooner or later, many people, will decide that their own best (financial) interest or needs will exceed their ability to comply with the public needs. Does that sound right?

        I mean if someone is living off week to week and just covering the bills, mortgage, rent etc then bang it's either I need to work or I might end up homeless, I know which choice if be taking.

  • bobbified on 19/03/2020 - 19:08

    I'm glad that paycuts and redundancies are things I probably don't need to worry about right now. I'm still employed but not costing my employer very much. My income protection insurance monies should get me over the financial side of all this.

    (Now I just need to hope my company doesn't go broke!)

    • herysoe on 19/03/2020 - 19:25

      "My income protection insurance monies" isn't this for only injuries or sickness, not redundancy?

      • serpserpserp on 19/03/2020 - 20:10

        No. You can get income protection for redundancies. If you are quick enough and see it coming from months away you can take it out and get over the waiting periods. I knew a guy that did just this at a big corporation because the wheels turn slowly with these things sometimes.

      • BinaryPirate on 19/03/2020 - 20:10

        They usually cover forced redundancy but not voluntary.

      • bobbified on 20/03/2020 - 05:39

        Yes, that's correct. I've been sick and can't work so the insurance company is paying my wages (reduced to 75%). I'm still an employee, but my company hasn't been paying me a salary or anything while I'm off work.

  • JimmyF on 19/03/2020 - 19:40
    +1

    Pay cut is in the range of 20% to 40%.

    Is it a pay cut or are you being asked to take leave without pay? There is a BIG difference.

    They can't cut your pay and expect you to do the same amount of work ie 5 days a week, but they can ask you to take 1 day a week without pay aka 20% reduction in pay, or 2 days a week without pay aka 40%.

    See Fair Work site for more details

    • AdosHouse on 19/03/2020 - 20:28

      I agree with this. If there is still the same amount of work to do, the company is doing well and doesn't need to cut pay. If the work is drying up, then less pay and less work makes sense.

  • serpserpserp on 19/03/2020 - 20:08
    -3

    If it was me, I'd be annoyed. So I'd look for another job while all this is happening. The job market is still open at the moment, companies are still hiring and if you get on with looking NOW you might be able to get into something new before the jobs dry up.

    I also think about all the public school teachers that are all in a hurry to be sent home in a school closure scenario. I don't think that if they actually got what they asked for, schools could get closed for up to 6 months and I'm pretty sure the government isn't going to have teachers on full pay for 6 months to sit at home and self isolate.

    Completely understand elderly teachers not wanting to work. They should absolutely try and see if they can take leave/unpaid leave for as long as they can to avoid getting the virus.

    • JimmyF on 19/03/2020 - 20:50

      So I'd look for another job while all this is happening

      the world is in free fall, best of luck with that.

      • serpserpserp on 19/03/2020 - 20:55

        the world is in free fall, best of luck with that.

        You are currently not in the job market are you?

        • Hardlyworkin on 19/03/2020 - 21:01
          +2

          Job market right now = packing shelves at supermarkets

          • serpserpserp on 20/03/2020 - 07:48

            @Hardlyworkin:

            Job market right now = packing shelves at supermarkets

            All jokes aside, it actually isn't.

  • mbck on 19/03/2020 - 21:36
    +4

    Take care everyone. Just talk and respect one another as best as everyone can.

    • nahi11 on 19/03/2020 - 23:03
      -3

      What a pointless comment

  • [Deactivated] on 19/03/2020 - 22:20
    +1

    I’d accept the pay cut and be grateful the employer is trying to keep everyone utilised and paid. Jumping ship would be very hard in this climate, with many companies barring external meetings, locking down offices and also cutting costs.

    There is no magical way to keep paying full wages when revenue is in free fall. Even if the cash reserves are there they’d have to stem the losses ASAP.

    Presumably it’d be structured as LWOP with hours going down along with pay in any case.

    • LazyOtter on 20/03/2020 - 09:08
      +1

      even getting a new full paying job now is too risky. you wouldn't know if you'll pass the probation period

  • Baa on 19/03/2020 - 22:22
    +1

    If you do end up taking a pay cut I would personally look at cashing out some of my leave so it is paid at the higher rate, instead of at your lower rate.

    • LazyOtter on 20/03/2020 - 09:05

      i dont think this will help neither the business or myself to suddenly take a few days or weeks off. i'll lose a lot more than gain.

  • tsunamisurfer on 20/03/2020 - 00:31
    +1

    People like the OP derserve everything they get.

    The employer is trying to find a way of keeping the business alive and keeping workers employed as long as possible. They asked for a compromise.

    This has happened before Griffin Coal, the Car manufacturing sector, and many others, workers are hell bent on killing the Goose that lays the golden eggs.

    • Webber000 on 20/03/2020 - 18:51

      It's not a compromise its an ultimatum.
      Something is only a compromise if both sides mutually agree to it. The workers were not even consulted.

  • afah0447 on 20/03/2020 - 08:58

    Consider yoursellf lucky. Many will lose their jobs in the coming months…

    • LazyOtter on 20/03/2020 - 09:03

      yeah i do, hope you are too.

  • DemocracyManifest on 20/03/2020 - 09:08
    +1

    Be careful agreeing to pay cuts now because it will affect your redundancy payments and entitlements, the bean counters know what they are doing. Consider the impact on for example your income protection there are flow on effects

  • cartesius on 20/03/2020 - 13:27

    Outside some possible nefarious reasons already mentioned here, your employer will have fewer customers and employees will have less work. Same amount of people doing less work, hence less pay, or less work with fewer employees.
    It seems to me that you need a BATNA (better alternative to a negotiated agreement). If you don't have better alternatives to the proposed employment changes, you can't really navigate the situation to your benefit.

  • crashloaded on 20/03/2020 - 16:05

    Sometimes even more redundancies come after a pandemic like this when management realise what roles aren't really needed to run the business.

  • MrBear on 20/03/2020 - 21:25

    Is it a pay cut or a cut in hours?

    • [Deactivated] on 27/03/2020 - 14:46

      The latter is acceptable . The former isn't. I'm willing to work less and get paid accordingly , rather than do the same amount of work but get paid less.

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