Profitable company cutting workers pay by 10%

Teamhar

As the title says, my partner's very profitable employers are about to force a 10% pay cut on their staff. He's already underpaid by industry standards and a wage review a few months ago and the increase that was agreed upon hasn't happened. A new contract was never issued but thats neither here nor there. We're interested to know, if there is a course of action that can prevent the pay-cut going ahead? He's non-union. I read on another forum that people have to expressly agree to a pay-cut. The employer then has to keep that person on at the same rate or else offer redundancy.

Cheers,
T.

Nody

Redundancy only kicks in after 2 years, keep that in mind.

Teamhar

Hi, He's there three years now. We just think its very shoddy, cynical behaviour of a company that turning over millions and millions in profit to expect their staff to take a 10% cut. They're using the recession as an excuse and its quite sickening. Its even more of a kicker as I'm currently out of work and we need every penny we can get. He doesn't think he should just roll over and accept it- if they turned around and offered redundancy instead, he'd probably take it as we're planning to bail out of Ireland in the next 6 months anyway.

T.

Oasis44

Bit of a grey area this - on one hand his employers cant force the pay cut on him BUT if he refuses and other colleagues take the cut he could be seen as a 'trouble maker' and maybe singled out for redundancy further down the line. Really its up to each individual in non-union companies to bargain with their employers about their specific situation. If the company is profitable then this is a prime example of companies taking advantage of the recession and cutting their costs even though they dont need to.

seamus

Actually, they can force a pay cut on him, they just have to give him sufficient notice of the new contract. I always thought it was a case that you had to agree to them, but it's not so.

Teamhar

Yeah, there's not a whole lot of solid advice floating around out there though its a pretty hot topic. This particular company is still turning a good-sized profit and only last December they won a significant award in a legal battle through the High Court.

As for him being singled out for redudancy, he's the senior systems administrator (out of two people!) for five companies within a single group. It's unlikely he'd be let go as their 1000 plus technophobe employees would be screwed and their patched-up network and infrastructure would fall apart! Not only are they cutting the wages, no money for IT investment either apparently! Unbelievable.

T.

Sleipnir

seamus wrote: »

I always thought it was a case that you had to agree to them, but it's not so.

+1
So did I until quite recently.

Teamhar

Isn't that a change in your "Terms and Conditions" and thats something that not only has to be agreed to, but in writing also?

Its very confusing. A thread running on askaboutmoney.com from the employers point of view is asking the same question, can he force a cut on his staff and everyone is saying, "no", but no one seems to be pointing to any particular piece of legislation. I've skimmed through the Payment of Wages Act, but nothing about long-term pay cuts is leaping out at me.

helimachoptor

In my own place we were told that we have to take a "voluntary" cut as they cant enforce a mandatory cut.

seamus

Teamhar wrote: »

Isn't that a change in your "Terms and Conditions" and thats something that not only has to be agreed to, but in writing also?

<Snip>

Actually, I need to look into this more. I checked it out and one official source said that it could be imposed on you. Now I've found another equally reliable source saying the exact opposite...

seamus

Actually here we go:

A guide produced by NERA, which takes its lead from the Terms of Employment (Information) Act, 1994 and 2001, states that

An employer is required to notify an employee of the nature and date of any change to the particulars contained in the written statement not later than one month after the change comes into effect. In the case of a change which results from an employee being required to work outside the State, the employer must notify the employee of any such change prior to the employee’s departure from the State.

The "written statement" being your contract of employment.

Citizensinformation however looks at it from a contract law point of view and says that they are in fact required to seek your agreement before changing these terms.

So, a bit of an impasse. Neither seems to be at odds with the other, and by all accounts contract law still applies.

ifah

Teamhar wrote: »

Yeah, there's not a whole lot of solid advice floating around out there though its a pretty hot topic. This particular company is still turning a good-sized profit and only last December they won a significant award in a legal battle through the High Court.

As for him being singled out for redudancy, he's the senior systems administrator (out of two people!) for five companies within a single group. It's unlikely he'd be let go as their 1000 plus technophobe employees would be screwed and their patched-up network and infrastructure would fall apart! Not only are they cutting the wages, no money for IT investment either apparently! Unbelievable.

T.

hmmm ... not a good idea to declare himself irreplacable - 14 years working within IT as sys admin/dba/architect etc has shown me time and again that anyone who thinks they couldn't be made redundant because the company needs them are very wrong. They could make both of the sysadmins redundant and just sub-contract a managed services company in to manage the infrastructure - a potential big savings for the company depending on terms etc.

It's a very cold market at present for IT people - especially sysadmins so I wouldn't be rocking the boat.

Teamhar

If they're looking at cost savings, he's a hell of a lot cheaper than outsourcing to a third party. They'd charge a fortune just to survey and document the current set up, and thats if they could figure it out! As for it being cold out there, I know- I'm an IT engineer as well and going mad trying to find anything.

If a decent redundancy was offered as an alternative, he'd take it and run off with me to Canada, which is the plan, but we'd go sooner rather than later! A pay cut, while he's underpaid and the directors wallow in their massive salaries and bonuses, is just too hard a pill to swallow. Not just for him, but the other low-paid lackeys as well.

I'm just trying to figure out if he has the law on his side if he refuses to accept a cut.

Kipperhell

I am pretty sure they don't have to have agreement either.

As for them still making a profit it doesn't really matter. The company has to look to the current market and future.

In the current market they can pay less to their staff and be level with the market.
If things remain bad this year they could have a loss or foresee one.

I wouldn't consider the company as acting particularly rough on the staff.

Not much can be done AFAIK unless they unionise and strike which I doubt they will do.

seamus

Indeed, strictly speaking it doesn't matter how much money the company is making, all they really have to do is show that your position is no longer required, and possibly that there's currently no suitable alternative position to put you in.
I've seen people made redundant from good companies at the height of the boom.

InReality

seamus wrote: »

Actually here we go:

A guide produced by NERA, which takes its lead from the Terms of Employment (Information) Act, 1994 and 2001, states thatThe "written statement" being your contract of employment.

Citizensinformation however looks at it from a contract law point of view and says that they are in fact required to seek your agreement before changing these terms.

So, a bit of an impasse. Neither seems to be at odds with the other, and by all accounts contract law still applies.

I think contract law would take precendence here.
See the problems with changing the pay of the bankers for example.
Thats all based on contract law.

The Terms of employment bill , would refer to other aspects of your empoyment rather than pay.
Eg where you work etc.

And if there is a conflict contract law would take precedence as its been around for centuries and loads of case law etc.

Pity there is confusion though esp in these times.

c4sea

Its happening everywhere. i talked to a lawyer and he say if
it's only you then you can take them to court otherwsie take the pay cut or move on.

luckat

About time to get a union into the place.

Shelflife

The company may well be profitable , but in order to keep the jobs in ireland they may need a pay cut to be imposed, its a global market out there now esp in IT.

Teamhar

They're an Irish company who do all their work in Ireland so jobs leaving the country isn't going to happen. What they're attempting to do with this proposed pay-cut is opportunistic in the extreme. What they'll save in payroll they'll lose a lot more in morale, absenteeism and a generally half-assed approach to work.

If the workers all banded together and said they won't accept it, I'd imagine redundancy would be threatened, though its not necessary. Its about power, isn't it? If people do take redundancy, the company would end up having to rehire, though that said, they'd probably have their choice of cheap, willing-to-be-exploited labour. A 10% cut seems excessive to me and those who are the lower end of the scale are really going to feel it, particularly as bonuses etc are now gone. For directors and management on the otherhand, who have a share in the profits and whose bonuses are still in place, a 10% cut means nothing. If a pay-cut absolutely has to happen, surely is should be negotiable, with something in writing about how long it will be in effect for or at least a schedule of review.

I hate the mentality of employers in this country, "you're lucky to have the job, pay-cut or not, and you'll be grateful". I have never worked for anyone in Ireland that ever thought they were lucky to have me working for them, that's for sure!

How do workers in a company go about organising union representation?

AARRRGH

Teamhar wrote: »

As the title says, my partner's very profitable employers are about to force a 10% pay cut on their staff. He's already underpaid by industry standards and a wage review a few months ago and the increase that was agreed upon hasn't happened. A new contract was never issued but thats neither here nor there. We're interested to know, if there is a course of action that can prevent the pay-cut going ahead? He's non-union. I read on another forum that people have to expressly agree to a pay-cut. The employer then has to keep that person on at the same rate or else offer redundancy.

Cheers,
T.

I used to be a financial controller. Part of my job was to make sure the company wouldn't run into financial trouble in the future. This meant I would analyse our current sales, and current market conditions, and try to predict how much cash we would have in 3, 6 months, etc.

Although your partner's employer might be quite profitable now, it is likely their finance guys have looked at current market conditions and come to the conclusion there is a lot of bad news ahead. So what they are doing is protecting their business by making changes now instead of waiting until they're in the middle of the incoming sh*t storm.

I think it is prudent and shows the company has reasonably competent management.

AARRRGH

I will also add that without knowing the company's financial figures, it's possible their sales have collapsed (this is not unreasonable) and they're rightly trying to cut their largest expense - wages.

gerrycollins

AARRRGH wrote: »

I used to be a financial controller. Part of my job was to make sure the company wouldn't run into financial trouble in the future. This meant I would analyse our current sales, and current market conditions, and try to predict how much cash we would have in 3, 6 months, etc.

Although your partner's employer might be quite profitable now, it is likely their finance guys have looked at current market conditions and come to the conclusion there is a lot of bad news ahead. So what they are doing is protecting their business by making changes now instead of waiting until they're in the middle of the incoming sh*t storm.

I think it is prudent and shows the company has reasonably competent management.

i agree completely, whilst the company are profitable now the jobs might not be lining up at the rate they used to so they can predict some cash flow issues in the future and are been prudent about it,

Teamhar

Obviously a lot of people in management or else aspiring to it on boards. I guess these people don't need to be worrying about their take-home cash by the sounds of things. Must be nice. The point of the original post was:

a) can a company enforce a pay cut and have the law on their side
b) 10% seems excessive

When times were good, bonuses from this crowd of tight-asses weren't exactly forthcoming while the directors enjoyed and continue to enjoy excesive six figure salaries and guaranteed bonuses. It was over two years before my parnter's basic pay was reviewed and even though a raise was agreed verbally, he never got it. This is a company who have been around a long time and they will continue to be around in the future.

Am I alone in thinking that its just plain wrong to take advantage of the current economic climate to save a few quid? Particularly when its not necessary. This company are doing just fine and their figures are a matter of public record. If management were doing their job properly during the boom times, staffing and salaries from a cost-saving point of view should have been looked at then.

I'm sorry, but it makes me sooooooo angry.

T.

AARRRGH

Teamhar wrote: »

Am I alone in thinking that its just plain wrong to take advantage of the current economic climate to save a few quid?

Are you sure they are just taking advantage of the current economic climate? We are only at the beginning of a horrible few years of recession. Things are going to get so much worse, for many years, before they get any better.

I think people are living in fantasy land if they think they should be able to keep their boom-time bubble wages if their employer is predicting a sharp decrease in their revenue over the next few months/years.

Regarding your "is it legal" questions. I am not a solicitor so I cannot say for sure, but what I do know is I amn't seeing any companies losing court cases over wage cuts.

Teamhar wrote: »

Obviously a lot of people in management or else aspiring to it on boards.

That's a ridiculous comment btw. Just because I understand how a company's finance department works and how treacherous declining cash flow can be, doesn't mean I'm some sort of "doesn't understand the little people" person.

I just happen to disagree with your short-term view of finance.

I accept there is a chance the employer might be a chancer, but more than likely they're not. Oh, and managers are people too; they generally aren't evil people trying to screw over their staff.

eman66

Teamhar wrote: »

Am I alone in thinking that its just plain wrong to take advantage of the current economic climate to save a few quid? Particularly when its not necessary. This company are doing just fine and their figures are a matter of public record. If management were doing their job properly during the boom times, staffing and salaries from a cost-saving point of view should have been looked at then.

I'm sorry, but it makes me sooooooo angry.

T.

Overheard my director and a director of another company in the same business have a discussion on Thursday. When my director asked how the other justified a 15% pay cut across the board for his company, his reply was "just told 'em it was the recession". Then they had a nice long chuckle to themselves. I understand your anger.

EDIT: If a contract wasn't updated or replaced to reflect any pay rises I'm sure they could take those back.

Mezcita

Teamhar wrote: »

Obviously a lot of people in management or else aspiring to it on boards. I guess these people don't need to be worrying about their take-home cash by the sounds of things. Must be nice.

Ridiculous comment. You are blinding ignoring what other people are saying just because they disagree with you.

Teamhar wrote: »

When times were good, bonuses from this crowd of tight-asses weren't exactly forthcoming while the directors enjoyed and continue to enjoy excesive six figure salaries and guaranteed bonuses. It was over two years before my parnter's basic pay was reviewed and even though a raise was agreed verbally, he never got it.

Your partner's fault for either:

a. Not chasing his manager regarding the agreed pay rise.
b. Moving to a better paid job if he really was fed up at his apparent low wage.

Teamhar wrote: »

This is a company who have been around a long time and they will continue to be around in the future.

Am I alone in thinking that its just plain wrong to take advantage of the current economic climate to save a few quid? Particularly when its not necessary. This company are doing just fine and their figures are a matter of public record. If management were doing their job properly during the boom times, staffing and salaries from a cost-saving point of view should have been looked at then.

Can think of very few Irish companies which are unaffected by the global recession at the moment. If your partner's company is doing so well financially you should just name them because I know people who are getting the boot from a wide range of industries.

Joey the lips

Teamhar wrote: »

As the title says, my partner's very profitable employers are about to force a 10% pay cut on their staff. He's already underpaid by industry standards and a wage review a few months ago and the increase that was agreed upon hasn't happened. A new contract was never issued but thats neither here nor there. We're interested to know, if there is a course of action that can prevent the pay-cut going ahead? He's non-union. I read on another forum that people have to expressly agree to a pay-cut. The employer then has to keep that person on at the same rate or else offer redundancy.

Cheers,
T.

Hi T, Its a sympton of employer greed and you will find that while you have a case the employer has a better chance of defending it. He can also call the redundancy card if it gets to hot.

Its a total lack of respect and its the reason the airport is going on strike next week. DAA are profitable but not paying their workers at the same time they are investing in the swiss aircraft hangers.

Its an employers market for the next couple of years. Have you chcked your rights with citizen information

thebman

Teamhar wrote: »

They're an Irish company who do all their work in Ireland so jobs leaving the country isn't going to happen. What they're attempting to do with this proposed pay-cut is opportunistic in the extreme. What they'll save in payroll they'll lose a lot more in morale, absenteeism and a generally half-assed approach to work.

If the workers all banded together and said they won't accept it, I'd imagine redundancy would be threatened, though its not necessary. Its about power, isn't it? If people do take redundancy, the company would end up having to rehire, though that said, they'd probably have their choice of cheap, willing-to-be-exploited labour. A 10% cut seems excessive to me and those who are the lower end of the scale are really going to feel it, particularly as bonuses etc are now gone. For directors and management on the otherhand, who have a share in the profits and whose bonuses are still in place, a 10% cut means nothing. If a pay-cut absolutely has to happen, surely is should be negotiable, with something in writing about how long it will be in effect for or at least a schedule of review.

I hate the mentality of employers in this country, "you're lucky to have the job, pay-cut or not, and you'll be grateful". I have never worked for anyone in Ireland that ever thought they were lucky to have me working for them, that's for sure!

How do workers in a company go about organising union representation?

One thing to consider is that they may have expanded recently and borrowed money to do so and are being squeezed by the banks to pay it back. So they could be making a profit but handing it to the bank.

krust

Everyone is replaceable.

I would take the paycut. Chances are that there are a lot of highly skilled IT people out there now without a job, and they surely wouldn´t mind stepping up to do his job.

mdebets

As he wants to leave Ireland anyhow, I wouldn't take the pay-cut.
The worst they can do is make him redundant, but he wants to leave the company anyhow. So at least he won't reduce his redundancy money by 10%.

jimmycrackcorm

It might be very difficult to force a redundancy in this instance as there are only two sysadmins and both would have to be made redundant otherwise it would be an unwarranted dismissal if the OP's OH was picked out. Given that a company cannot run its IT systems without admins, the job is probably safe.

maninasia

We all have choices in life. Just because the situation at work is not rosey is no reason to say 'we are out of here' and complain about Ireland being crappy...you will hit hiccups and problems in Canada too. Between the two of you you could easily set up your own admin company and take on outsourced contracts. The general environment has changed to one that is adverse to salary worker, you must acknoledge that system admins have done very well in Ireland over the last 10 years on good salaries.

You can look for another job in another company even in the bad economic climate and yes you can emigrate. Sh%t happens, if you work in other people's companies you must remember it is their company by their rules and there's not much you can do, you take the money and then you play by their rules, don't get angry, not worth it!

mountainyman

Have you been to a solicitor?

InReality

c4sea wrote: »

Its happening everywhere. i talked to a lawyer and he say if
it's only you then you can take them to court otherwsie take the pay cut or move on.

I don't understand this advice.
Why couldn't you take them to court if its everyone ?

All my workforce once had a change in ours T&C and we all signed a new contract individually to reflect this.

segaBOY

Rising unemployment means more competition for jobs, this will lead to more access for your employer to an ever expanding labour market allowing for wages to fall. This is very unfortunate but just the way it is in a relatively free market economy. Whether the company continue to make strong profits or not they can reduce pay if they like unless they are breaking contract terms and conditions. That is my view anyway-it sucks but just the way it is these days.

Teamhar wrote: »

Obviously a lot of people in management or else aspiring to it on boards. I guess these people don't need to be worrying about their take-home cash by the sounds of things. Must be nice. The point of the original post was:

a) can a company enforce a pay cut and have the law on their side
b) 10% seems excessive

When times were good, bonuses from this crowd of tight-asses weren't exactly forthcoming while the directors enjoyed and continue to enjoy excesive six figure salaries and guaranteed bonuses. It was over two years before my parnter's basic pay was reviewed and even though a raise was agreed verbally, he never got it. This is a company who have been around a long time and they will continue to be around in the future.

Am I alone in thinking that its just plain wrong to take advantage of the current economic climate to save a few quid? Particularly when its not necessary. This company are doing just fine and their figures are a matter of public record. If management were doing their job properly during the boom times, staffing and salaries from a cost-saving point of view should have been looked at then.

I'm sorry, but it makes me sooooooo angry.

T.

I'm sorry but some professions have taken up to 45% pay cuts-or simply lost their jobs as the case may be. It's a dog eat dog world out there but it really is time to get realistic that we are in a major recession (of anywhere up to 6% contraction predicted this year) and last I heard 10.4% unemployment-it's time to get realistic, leave solicitors and unions at the door-they'll only wreck the competitiveness of the country on a global stage in the long run.

I'm sorry to hear about the cuts but it's happening everywhere

Sofiztikated

You do know a company exists to make money? Even if they are a profitable company, to make as much profit as possible, they will need reign in the excessive labour costs. (Note here, i am not saying your OH is excessively paid.)
Oh, and that crack of managers being highly paid, and doing little? Very niave. As a manager in a certain industry, we're currently putting in over 60 hours a week, after a 10% cut. Yes we've had to cut staff, to make sure our bottom line is as low as possible.

segaBOY

Sofiztikated wrote: »

You do know a company exists to make money? Even if they are a profitable company, to make as much profit as possible, they will need reign in the excessive labour costs. (Note here, i am not saying your OH is excessively paid.)
Oh, and that crack of managers being highly paid, and doing little? Very niave. As a manager in a certain industry, we're currently putting in over 60 hours a week, after a 10% cut. Yes we've had to cut staff, to make sure our bottom line is as low as possible.

There was the whole "I'm worth €Xk and won't work for a euro less" attitude around during boom times, people need to reevaluate and realise that we are in one of the most overpaid, over priced and over hyped economies in the world-realisation of how fast and much our economy has fallen in such a short time should hit this home.

If wages fall the cost of living will generally fall, we should then get more competitive and our exports increase, basic enough model but true none the less-of course, many people cannot grasp such a thing when "pay cut" is uttered.

Sofiztikated

Oh, and yes, they can ask him to take a pay cut or redundancy, check his contract. Every standard employment contract will say somewhere, and i paraphrase here, the Company reserves the right to take action in the event of non profitability.
Again, they may be profitable, but to keep as much profit as possible, costs have to be cut. Business is business. Staff just happen to facilitate this business. (This makes me sound like a complete heartless git, but that happens to be the truth.)

InReality

Sofiztikated wrote: »

Oh, and yes, they can ask him to take a pay cut or redundancy, check his contract. Every standard employment contract will say somewhere, and i paraphrase here, the Company reserves the right to take action in the event of non profitability.
Again, they may be profitable, but to keep as much profit as possible, costs have to be cut. Business is business. Staff just happen to facilitate this business. (This makes me sound like a complete heartless git, but that happens to be the truth.)

1.
They can ASK of course - but I'd reiterate my earlier comments about compulsary pay cuts, even with a such a clause.

2.
Redundancy is another matter.

3.
As for Pay cuts and profitability .... so interesting facts here.
http://www.damiansaunders.net/2009/02/26/commentary/hp-pay-cuts-an-unfair-act-of-economic-opportunism-and-greed/

The Insider

Teamhar wrote: »

If a decent redundancy was offered as an alternative, he'd take it and run off with me to Canada, which is the plan, but we'd go sooner rather than later! A pay cut, while he's underpaid and the directors wallow in their massive salaries and bonuses, is just too hard a pill to swallow. Not just for him, but the other low-paid lackeys as well.

I think you are in for a huge shock if you think running off to Canada will resolve your problems. There is huge competition for IT jobs over there and most IT people over there are very well qualified and extremely experienced techs. I have seen people working in Helpdesks over there who would walk into Senior Systems Administrator jobs over here... and that was 4/5 years ago when things where going well. You will be at a huge disadvantage if you have never worked in Canada and have not attended a Canadian\US university.

Also if you think Irish companies treat their staff poorly then wait until you get over there. 10 days holidays a year, 60 hour weeks as the norm. I have seen people on 2 year contracts not being told if their contract is being renewed or not (and deliberately being mislead about it) and on the last day security staff coming up to their desk and escorting them from the building.

If I was your husband I would take the 10% pay cut and just be happy I still had a job. There are no jobs in IT at the moment and he could easily be replaced by someone who would work for cheaper and do just as good a job.