46

My employer's main clients are unable to pay their bills to us, as they cannot work at this time. Therefore my boss is offering me 50% wages until the coronavirus goes away (technically for part time hours, but it's been intimated that there'd be an expectation to work regular hours unofficially to help the company "weather the storm") or paid redundancy.

I have been searching for a new job since hearing this, but I want to understand if my employer's offer is fair/legal.

  • 1
    Comments are not for extended discussion; this conversation has been moved to chat. – Neo Mar 20 at 14:18
  • 1
    How much redundancy pay would you get (or putting it another way, how many years service do you have)? I would weigh this up compared to the salary cut before deciding, and bear in mind that a company forced to take these measures is unlikely to last long (and if it goes under in a few months, you're very unlikely to get any redundancy pay, and possibly not even your last paycheck.) – berry120 Mar 20 at 16:36
  • 10
    This probably needs the "rapidly-changing situation" notice. The Chancellor of the Exchequer has announced a huge support package this evening, backdated to 1 March. – Andrew Leach Mar 20 at 17:36
48

At this time of coronavirus it's valid for a company to look at alternatives to keep afloat, reduced hours is one, redundancy is another, shutting the company completely is yet another.

It's important to keep in mind that we in the UK are going to go through a very hard time, obviously this is speculation, but given past events and what's currently happening with financial markets it's not hard to come to this type of conclusion. Between on-going Brexit issues and now coronavirus we're going to be hit hard. Some companies have already planned redundancy exercises based on "weathering the storm" of Brexit, now this will no doubt push others to have to do the same. Even after the virus is gone companies will still have to try and recover for the huge financial losses they'll no doubt take.

Remember though, the grass isn't always greener - and at a new employer your legal rights revert to practically nothing. You'll no doubt have a probation period, and even then it's 2 years continued service before you'd have redundancy rights against discrimination (as an example) should that happen between now and then, your sick leave would be back at the starting level (albeit with certain government provisions in place - for now). It's a gamble to leave, it's a gamble to stay.

Ultimately you have to weigh up the pros and cons that are personal to you.

On the point about working full time hours but half day wages - a company can request this during this situation, however it should be deemed as overtime which you would be entitled to be paid for (catch 22 there). The only way I'd be willing to do that is if I believed the company could come out of this intact and with written and signed guarantees that this money would be paid back, or holidays given of equal value, after it turns around - don't get this verbally, as you most likely wouldn't see it. Also don't forget that your holiday pay is based on hours worked, so working reduced hours will reduce your yearly holiday entitlement - and after an Employment Tribunal last year holiday pay is also to be given for overtime, which you would miss out on if you work hours for free.

| improve this answer | |
  • 15
    Fair enough but whilst I certainly might take a pay cut I wouldn't be doing the same hours – Neuromancer Mar 19 at 15:22
  • 4
    @Neuromancer then you will likely be looking for another job in the situation OP describes. – Tymoteusz Paul Mar 19 at 15:48
18

Bad situation. If you accept then make sure that you don't lose anything (beyond the salary). Negotiate with the boss. Reasonable terms would be a contract that says:

  1. This is a temporary change of your salary. It will return to the full salary as soon as the crisis is over.

  2. Any redundancy payment will be calculated based on the original, full salary.

  3. Same terms for everyone, including management and owners.

  4. Someone with experience in these matters finds out what state benefits you might receive based on the lower salary and how to apply for them.

What's slightly to your advantage is that your tax payments and NI contributions will fall by more than 50%. Depending on your financial and family situation, you may get some more advantages, like getting child tax credits that you might not have received at the old salary. Go to a tax calculator website and run the numbers.

PS. If the employees agree on this, then the company has the choice of accepting or going bankrupt - while the whole point of this is avoiding to go bankrupt. Severance pay would be based on what your contract says.

Update: The chancellor has announced that they want to substantially subsidise wage payments to employees. One plan would be that employers wouldn't have to pay income tax and NI contributions. If my employer took what they have to pay for me (net wage + my income tax + my NI contribution + employer NI contribution) and were to pay 50% of that directly to me, then I wouldn't be too bad off.

| improve this answer | |
  • 5
    And what do you do when boss refuses all those terms? – Tymoteusz Paul Mar 19 at 15:40
  • 7
    @TymoteuszPaul it may well be that getting fired now would be financially preferrable than going on with a bad offer which puts you at risk of the company closing in e.g. 6 months and then you'd likely get much worse conditions of leaving - lower unemployment benefits, possibly not getting your full wages and redundancy if the company is insolvent, etc. If you stand your ground and get fired while the company is still not bankrupt, then you'll get a bunch of money that you'll not get otherwise. The social protections "work" if you lose your job, but not if you accept an offer like this. – Peteris Mar 19 at 15:50
  • 3
    @Peteris Where did you get the idea from that OP will get some massive downfall from getting fired? And I think you are not talking about OPs country, as in UK JSA (could call it unemployment) is not based on OPs income, nor quitting or getting fired will generally affect benefits. The only thing possibly affected will be redundancy pay, which in OPs case will be just above a month pay, that's it. – Tymoteusz Paul Mar 19 at 15:52
  • 4
    So you're looking at 2.5 months of salary now, or 2.5 months of your new salary =1.25 months of your current salary if you take that 50% pay cut. Seems like a significant difference to me. – MSalters Mar 19 at 16:12
  • 3
    ... I can even think of ways the OP could spin this into a positive in interviews if they have the financial ability (and cojones) to take a cut to half-salary in the meantime - and is able to explain in terms of weighing up risks and so on - but I worry about the aspect of being "implicitly" expected to work extra hours off the books anyway, I would focus pushing back on that. Either the work is there or it isn't - make up your mind! (Directed to the employer obviously.) – seventyeightist Mar 19 at 20:19
9

In this scenario, if you accept those conditions you'll be effectively subsidising your employer's business, in the form of the withheld salary you won't be receiving by working part time for a full time job. You have a few ways of responding:

  • one way would be asking for a written commitment from your employer to pay you later a bonus in proportion to the amount of "extra part time hours" you will be working.

    • if the company is a startup, you might ask for (more) equity, as a replacement for the funding you are indirectly providing to the company.

    • if the employer is only "taking" and is not negotiating bonuses or equity as future compensation, then you have to decide your alternative scenarios: can you find another job now? Can you find another later? How valuable is this job for you, given the circumstances? And if you change job, what are your "transaction costs"?

Ultimately you'll need to put a number on your various options, depending on the job market and your priorities, considering the contingency (beginning of a global recession).

| improve this answer | |
6

The UK Government has announced that it will pay 80% of wages for those not working in coronavirus crisis. (https://www.theguardian.com/uk-news/2020/mar/20/government-pay-wages-jobs-coronavirus-rishi-sunak)

So I think the answer now is to see what your boss says on Monday

| improve this answer | |
5

Honestly, yes.

Given the economic reality we're now in, it's both fair and reasonable. Many companies are going to be doing even worse.

Doesn't mean you can't negotiate though. I'd recommend negotiating for (temporarily) reduced pay, at full hours, in return for additional Paid Time Off next year. Half pay for (say) 3 months would equate to an additional 6 weeks holiday.

This way, the company saves the cash they definitely need, while you still get paid your full amount (in holiday rather than cash), in a way where they still owe you the full amount (I think) if they make you redundant in future.

| improve this answer | |
  • And make sure to have a signed agreement! – Simon Arsenault Mar 20 at 19:20
2

I don't know the specifics of UK labor-laws, rights and regulations, however are you sure any (temporary) employment benefits you are entitled to are not more than 50% percent of your current salary ? If so, this proposal sounds like a terrible deal. Especially if your company goes down in a few months anyway, in which case you still lose your job and have far fewer benefits.

| improve this answer | |

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .