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My current company is struggling financially and because of that has initiated companywide pay cuts and frozen all salaries from reviews.

The result is my paychecks are significantly less (~10%) from what my pay is "on paper"

When the companies I am applying for ask what my current salary is, I obviously want to report the higher value but I also know large companies sometimes ask for previous pay statements and I do not want it to appear that I am being deceptive. The only documentation I have that supports my "current" pay is my last review. At the same time I would rather not report my companies’ financial struggles to prospective companies.

What is the best approach in this situation, besides "be honest". I would not lie about the situation if asked.

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Why are you providing your current salary? This is a big no-no in terms of negotiating strategy, assuming you want a good salary for yourself. Just leave that field blank. If they won't let you continue without a number in that field, put in $1. They want you to reveal this number as a starting point for salary negotiations, and it's almost always a bad idea for you to do so. –  jozzas Nov 15 '12 at 3:27
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You don't specify your locality, which is very relevant in this context. In some countries, it's big no-no to ask for current salary and you would typically not answer such a question, or you would answer it in very vague terms. But I understand that in some countries (like India, I gather), it's more of a rule to both ask and to require proof (pay statements). –  pap Nov 15 '12 at 8:08
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@pap It is somewhat of a cultural thing for India because even if you have desired job skills, they are taught from an early age that you only have one chance at certain things if you are lucky so it is best to be quick, prompt, easy-going, pandering, and surrendering to authority. In a country of over a billion, privacy and autonomy is a luxury for the wealthy. –  maple_shaft Nov 15 '12 at 12:28
    
@maple_shaft Then it seems to follow that employers will have come to expect this, and refusing to provide information on for instance pay would in reality be highly detrimental to your chances. Assuming this is India, of course. I don't want to make this into an authoritative answer, I don't have enough experience of Indian hiring practices. What is your sense here? –  pap Nov 15 '12 at 12:38
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@pap My only sense is that I find it sad that an entire culture would simply accept being taken advantage of and being powerless as a normal thing. I pray that Indians who believe this will one day open their eyes and start standing up for their rights. –  maple_shaft Nov 15 '12 at 12:48
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2 Answers

There are a few ways you can go with this.

Not reveal any salary information. This article does an excellent job of representing reasons why this can often be the optimal strategy. The general sentiment is a company knowing this information can easily know what range you will be more likely to accept, and rather than pay market rate or what you are worth, undercut this figure.

For example, if you are currently significantly underpaid, a 15% or 20% increase in salary relative to your current salary will seem huge - but may in fact result in a considerably lower offer than what market rate is, etc.

Either way, the article makes a compelling case against revealing your salary information. Respond something like

  • "I would prefer my current salary remain confidential out of respect to my employer"
  • "I would prefer to not reveal my current salary. Can I give you the current market rate for people in my position according to my research?" (make sure you've actually researched this... should go without saying)

Only if they press you on the matter should you even consider giving this information, and even then, it is still something worth not giving away so freely. This gives them a great baseline for their initial offer (which you do not want to give them).

Tell the truth. If you insist on answering, there is nothing wrong (other than giving away negotiating power) with saying something along the lines of - assuming 50k salary:

  • "my current salary is $50,000 per year, but I am only being paid $45,000 due to budget constraints."
  • "I started at this position at $50,000 three years ago" or the appropriate variation.
  • "My total compensation is in the neighborhood of $65,000 a year"
  • "The pay range for my current position is from $40,000 - $60,000"

I cannot really recommend any of those because I fundamentally think answering this question is a bad idea from an overall negotiation perspective. But if you go that route, you can answer honestly in multiple ways that avoid your specific concern.

Honestly though, I would have a hard time being seriously interested in any company which forced me to reveal salary in spite of having indicated desire to respect my prior employer.

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You do not need to reveal your salary!

Barring some regional or local law in your area (I have heard that Brazil requires you reveal your salary, but Brazil also has a lot more worker protections than most countries), then you have absolutely no obligation to reveal your current salary to a potential employer.

Company background checks do not uncover such information

When doing a background check, a company is not allowed to ask what a potential candidates previous salary was. A background check only reveals criminal history and verifies that you have worked at the places you claim on your resume and in the positions you claim.

The Scenario

The company refuses to interview you until you provide your current salary. A good number of companies operate on this policy. You are scared that you will not be hirable unless you comply.

Why are you leaving your current job? You are leaving your current job because you feel that you are being underpaid.

Why is walking away from this company a good idea?

Revealing your current salary to an employer basically removes your ability to negotiate salary with them. It is like playing poker, and revealing your hand to everybody at the table before you make a bet. That would not be a very successful poker player.

If the company is more concerned with your current salary than your skills and what you offer, then they don't really need or want you for your skills so much as they want warm bodies to fill seats for as cheaply as possible or they want people that they can easily control regardless of their contributions to the team. You could be the worlds best __ who ever lived, but to companies like this it just doesn't matter unless they know that they have the ability to manipulate and control you.

Advancement of career

If you wish to advance your career with a challenging and rewarding job, you need to ignore companies like this because they more than likely will not deliver the career growth that you may want. A company that is interested in you for your skills and experience will be more than willing to negotiate salary with you and pay what is fair market rates to have you on their team. Being able to negotiate salary also demonstrates confidence, strength, and these qualities make it more likely for you to be promoted for your natural leadership qualities in the future.

True story I applied to one well known corporation in my city and was asked to reveal my salary information on the application. I left it blank. Their HR called me and told me that I needed to tell them because it helps them filter out people who demand more than the going market rates. I said that I do not apply to companies that require this of me. They called me back the next day and asked me to come in for an interview anyway.

I went into the interview and it went very well. At the end the manager started negotiating salary with me and led with asking me how much I make currently. I didn't tell him and instead told him what I felt was a fair offer based on going market rates. Again he insisted that I won't be considered if I don't reveal. I immediately thanked him for his time and got up to leave.

They called me back the next day for the amount I suggested. I turned down the offer anyway because the environment wasn't a good fit for me.

It goes to show that if you are confident and have desired skills that you do not need to do this.

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You make a great point..There is also the fact this comapny you are trying to get hired by as no way to confirm the number you give them, so at the end of the day, they are only going to use it to come up with a salary in THEIR range. In other words they are going to come up with a range that fits them, then likely offer the very low end, leaving you very little room to work with. –  Ramhound Nov 15 '12 at 12:52
    
@Ramhound To me it doesn't matter what is offered, but if I am never allowed the opportunity to even negotiate then I am losing the control and autonomy that I have grown accustomed to over the years. –  maple_shaft Nov 15 '12 at 13:05
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