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I work in a Canadian office for a large US-based company that has several offices throughout the US and Canada.

Senior management in the US has already been forced to take cuts, and Canadian managers are being encouraged to (but can't be forced to) accept a pay cut. This week, our employer is asking everyone else (R&D, finance, HR), to take a 20% pay cut. It's heavily implied that if we don't take this cut, we'll be dismissed, served our severance packages, and then we're out of a job with just a few months of severance to hold us over until we're reliant on un-employment insurance. My opinion is that it's better to stay employed as long as possible, so long as this doesn't impact my severance package (8 months of salary at my "current rate").

Question: when I'm served this request (a few colleagues have already received it, with a request for a temporary 20% pay cut), what questions should I ask or what amendments/terms should I demand prior to accepting the pay cut? Based on advice so far, I should:

  • Ask if my severance package of 8 months of salary is paid out at my normal rate, or the reduced rate? If it's a 20% pay cut, my 8 months of severance becomes 6.4 months.
  • Ask if the pay cuts will appear as deductions on my bi-weekly pay checks, or if my actual base salary itself will change (apparently this has tax implications?).
  • Ask if, in the case the company continues to do poorly, will the cut pay be paid back to me (i.e. if I work for 2 months at 80% of my normal salary, and am laid off anyway, will the 20% of two months' pay be repaid to me)?
  • Will any outstanding stock bonuses or RSUs be paid out to me if I'm laid off? After all, I wasn't given a chance to work long enough to cash them out (I think in some states/countries it has to be paid out in full).
  • I have several hundred dollars of personal possessions at the office, but it's closed unless there's a critical need. Can I demand my possessions be couriered to my apartment at no cost to myself, in return for me mailing back my company laptop and iPad?

What else should I consider before signing such an agreement?

Thank you, and stay safe!

5

You and your colleagues together should discuss this with your management. There should be an agreement that everyone’s regular salary is unchanged, but temporarily the company pays 20% less - to everyone or everyone above some minimum wage. And that severance pay etc. would be based on the original salary.

The obvious reason would be that you want to help To keep the company Running but you don’t want to lose out if it doesn’t.

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