Workplace rights: Job cuts or pay cuts?

Job cuts may be a knee-jerk reaction for businesses struggling to reduce costs, but implementing redundancies is expensive, leads to loss of valuable skills and experience, and damages staff morale.

Last Updated: 09 Oct 2013

Many employers are broaching alternatives such as pay cuts, short-time working and unpaid leave. Options offered by telecoms giant BT include up-front payments in return for taking sabbaticals or agreeing to go part-time. British Airways has even asked employees to work for free, with pay deductions spread over a period of months (presumably to comply with the company's national minimum wage obligations). Strategies of this type usually involve the temporary or permanent variation of employees' contractual terms. Introducing such changes with clear, individual consent is fine, but imposing them is fraught with potential liabilities. In particular, if 20 or more employees are affected, the legal duty to consult collectively with staff representatives could be triggered. Failure to comply can lead to a tribunal award of 90 days' pay per employee. So much for cutting costs ...

- Michael Burd and James Davies, Lewis Silkin LLP solicitors

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