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I work for a software development company. Yesterday my company announced 50% paycut for all employees because of corona virus epidemic without reducing our work hours. Management is calling us frontline warriors and wants us to put more effort into our work and encourages us to work extra to make our clients happy.

Our company works with a USA company. Our company receives our work payment in USD. Recently, the USD to PKR conversion rate has increased by 15%. But our company still forced a paycut of 50% without reducing workhours.

What could be my options in this situation? What can I do in this situation?

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    So there is no clear solution, basically love it or leave. Good luck Apr 11 '20 at 8:22
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    I'd be very wary of comments or answers that just say "love it or leave it". There may be approaches here that can give a more favourable outcome. Apr 11 '20 at 9:15
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    Is there a union that covers your work that you can join? If yes, do so and encourage your workmates to do the same. You may be fired but anything you do to protest this is likely to end that way. This is an example of why unions exist. If employees rely on the good heart of employers they will discover the realities of that relationship at some point.
    – jwpfox
    Apr 11 '20 at 9:19
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    @GregoryCurrie sounds like the owners are using current times as an excuse to screw the workers even though the work has not reduced.
    – Solar Mike
    Apr 11 '20 at 9:21
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    @SolarMike it may equally be a last-ditch for the business to try to stay afloat. Do you know what's worse than 50% cuts across the board? Company shutting down. And without knowing company financials, you cannot really know that's not the case. Apr 11 '20 at 10:52
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Our company works with a USA company. Our company receives our work payment in USD, recently USD to PKR conversion rate has increased by 15%. But our company still forced a paycut of 50% without reducing workhours.

This is something that is happening with many software houses nowadays. While I don't know your specific industry, in many places the speed of developing software was based on future profits from it, it was partial speculation with future money. With the economy taking a very big hit across the globe, there is a lot less money to go around, and such spendings are often no longer viable. While you note that exchange rate has gone up etc, the reality is that you don't know what's going on in the US company, but my guess is that they already announced to your company that there will be a lot less work coming downstream unless prices can be cut substantially. And that's the positive spin, the other, a lot less negative possibility is that the US company simply cut off future projects.

It is, of course, possible that they are also trying to take advantage, but I would say that this notion is a bit naive, as if the economy truly did not impact the industry then their competitors will very quickly poach all the talented people from your company by offering them around-their-previous wages. It's possible that your management is naive to not understand this, but that certainly wouldn't be my first guess.

The point I am trying to make is that this is a complex situation and just because you work as B2B for US company, and the exchange rate has gone up, that does not extend the changes that have happened in the last month and a half. And I hope it will help you to put some context around the 50% reduction in wages across the board - as this is something happening all around the globe. Not in every single company, but it is a widespread situation that will continue to grow for at least a bit longer.

What could be my options in this situation? What can I do in this situation?

First, you need to asses your own situation.

Can you survive on the reduced salary alone, without needing to touch your savings?

If yes, you are still in a reasonably great spot. While you will not have lavish amount of spare cash every month, you are still in a sound financial situation.

If not, if you will keep drawing the needed difference from your savings, how long can you last before not being able to cover the deficit? This will give you a timeframe in which you need to fix this situation. I highly recommend checking some local internet boards for financial and money-saving advice to at least try to make the deficit smaller, checking on money stack exchange can also be helpful, as giving detailed advice about it here is off-topic.

But no matter the result, you need to speak with your boss and understand how long is this pay cut going to last, is there some aid available if this pushes you into a deficit on your monthly budget and try to find out what's the long term strategy for the company to sruvive. If they want to keep the business afloat, they also understand that they cannot have employees who cannot pay their bills, and usually, there are some things that can be worked out - one example (may not be applicable in your country) would leverage some of the tax breaks to pay some of your outgoings as salary sacrifice, lowering the amount of your salary that goes to taxation.

As you noted in the comments, job market is not exactly hot right now, and it may well get worse before it eventually gets better, so it's best to keep the comm lines open with your boss and try to work some deal out that will allow everyone to survive through this.

And at the same time, keep your hand on pulse of the jobs around, send CVs around and maybe you will get lucky. But certainly, plan as if the 50% cut at the current company will be permanent, and when or if it gets overturned, it will be a pleasant surprise.

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    Solid answer, and the last paragraph is very important. Don't plan on things normalising in the near future.
    – Kilisi
    Apr 11 '20 at 11:50
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What could be my options in this situation?

Very limited it's clear that the only two options are leave or stay and take the pay cut. At a 50% pay cut I personally would not be able to make all my financial commitments per month anymore. Leaving is difficult I'm not sure what measures Pakistan has put into place but here in the UK getting a new job is much more difficult (not impossible).

What can I do in this situation?

That's really the same question, the answer again is leave or stay it's clear the company won't budge on this.

Sorry for the poor advice but that's all that's available to you.

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  • Personally, I don't think this is poor advice at all. The options are: take 0% of your salary, or 50% of your salary until you can find a new company that pays an acceptable salary or your current company reverses the cut. They're both pretty bad options, but IMO 50% is better than 0%. (For what it's worth I chose to accept a pay cut at my job, because I'd rather earn something than nothing, and it will be next to impossible to get a new job right now - the whole country is shut down).
    – Player One
    Apr 11 '20 at 11:21
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    I don´t know about Pakistan, but here in Germany and I believe similarly in the UK you could just say "No" and continue working under your old Wage. Your employer would then have find ways to dismiss you which is difficult provided they want the same amount of work done. At the very least,you would still get pay during the notice period and apply for unemployment benefits.
    – Daniel
    Apr 11 '20 at 15:34
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    @Daniel do you think a third world country is anything like the EU? Even if they have labor laws, how enforceable are they, and how corrupt are the legal systems. Not really a good comparison... Apr 11 '20 at 17:48
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    No - as I wrote, I don´t know about Pakistan. That´s why I didn´t give an Answer that may put OP in a worse situation than he may be in ...
    – Daniel
    Apr 11 '20 at 19:33
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What can you do?

First, gather information about your customer's situation. Some USA companies have been forced to close, but these are mostly personal-service companies like hotels, hairdressers, restaurants, sports. Many IT companies are still operating. Find out how your customer is affected. (A look at their public-facing web site will tell you a lot.)

A customer of mine sells IT to restaurants, and their business has all but stopped. Other customers actually have increased business.

Next, find out whether your employer has had incoming payments reduced. Ask your manager. You can ask subtly. Maybe you can say "it must be hard for the company's owners to be unable to make payroll". Your manager's reaction to such an expression of sympathy will help you understand. (In the USA, it's considered a personal disgrace for the executives when a company cannot pay its people.)

Armed with facts, decide whether it is worth asking your company to restore some or all your pay. It's possible they truly can't afford to do that.

There's always the newspaper. Outsource firm bleeds workers is not a headline your executives hope to see. If you go that route, the facts you have gathered will help the reporter. A company that cheats workers also cheats its community.

And you can always find other work one day. If this company is cheating you and your colleagues, your loyalty will be permanently damaged.

Good luck to you.

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    Many countries are looking at the prospect of a recession. In such time, a lot of businesses struggle. Just because a customer appears to be doing OK on the surface, doesn't mean they are not looking at ways to cut costs to remain more viable. Companies will often put on a brave face in order not to spook shareholders. So, whatever "facts" are that are established are likely to be meaningless. Apr 11 '20 at 12:55
  • @GregoryCurrie IMHO, there are other ways to cut costs before reducing salaries by 50%. A drastic measure like that can only be justified if there are current and imminent threats to the company economic situation. It doesn't seem reasonable to do that, just because you think your customer might be planning on reducing costs...
    – Adam Smith
    Apr 12 '20 at 14:39
  • @AdamSmith I was speaking explicitly to the idea that you can gauge how your customers are doing by doing a bit of personal investigation. Speaking to your point, of course there are other ways, however, with a lot of companies, wages make a fair chunk of expenditure, so it can be very enticing to cut them. Apr 12 '20 at 15:57
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It's all just BS lies and excuses to work you more while paying you less. That "frontline warriors" statement was absolute garbage!! It's laughable. A pathetic attempt to motivate you while working more and getting paid less. They might as well just drop you off in a warzone and pay you minimum wage.

There's absolutely NO justification for them to encourage you to work extra to make your clients happy if they aren't going to compensate you for that time. It's a common abusive labor practice. Companies want you to work as much as possible but they don't want to pay you as much as possible.

Get a new job and always remember: may the quantity/quality of your work match the quantity of your paycheck.

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