Never worked through a downturn - how do companies cut salaries?

rireland

I've never worked through a downturn but I've read about people having their pay cut etc.

How would this happen if you're on a permanent salaried contract?

28064212

Through mutual agreement. A company can't change your contract unilaterally, but you can both agree to changes. If the alternative is the company going under, and you entering an extremely competitive jobs market, it may well be in your interest to take some short-term pain

rireland

28064212 wrote: »

Through mutual agreement. A company can't change your contract unilaterally, but you can both agree to changes. If the alternative is the company going under, and you entering an extremely competitive jobs market, it may well be in your interest to take some short-term pain

So if you're in a multinational your salary is pretty safe?

LuasSimon

rireland wrote: »

So if you're in a multinational your salary is pretty safe?

You will find salaries are cut a lot quicker in non unionized employments .

28064212

rireland wrote: »

So if you're in a multinational your salary is pretty safe?

No, since they could just cut smaller components of the company e.g. shut down a department, branch, region, or even pull out of the country all together

tnegun

Had mine cut twice during the last recession. In hindsight the company could of weathered and it was used as an opportunity to remove non performers and reduce costs . There were about 100 employees but we were glad to hold onto our jobs so didn't kick up any fuss. There was no discussion we were called to meetings and told the % that was being taken they also announced lay offs at the same time or just before so we were glad to only loose a few %.

Plumbthedepths

I work for an indigenous company had our wages cut during the downturn to ensure the company's survival. It was tough but by mutual consent the alternative was closure. When conditions improved wages were restored and have received pay rises for the last 5 years. Short term pain for long term gain .

ToxicPaddy

Ive been through 3 different redundancies due to various reasons, mostly company funding drying up and the business closing but I've been in others who have had to restructure due to challenging economic conditions.

As mentioned previously, any company worth its salt wants to hold onto the good employees to help it survive, so they tend to come to a mutual agreement of cutbacks in salaries and bonuses. Other options are possibly shedding some of the fat (non performers) and cutback on spending and maybe look for a few redundancies as a last resort.

The problem with redundancies is that the good employees take them, head off to a new job with a nice big lump sum and the company is left with the non performers or the good ones who don't take the redundancy leave anyway as they prefer to leave on their own terms.

Mrs OBumble

Shorter working hours is another approach.

rireland

28064212 wrote: »

No, since they could just cut smaller components of the company e.g. shut down a department, branch, region, or even pull out of the country all together

In that case they'll have to pay redundancy right?

beauf

rireland wrote: »

In that case they'll have to pay redundancy right?

May not be huge amount for many.

https://www.citizensinformation.ie/en/employment/unemployment_and_redundancy/redundancy/redundancy_payments.html

beauf

ToxicPaddy wrote: »

Ive been through 3 different redundancies due to various reasons, mostly company funding drying up and the business closing but I've been in others who have had to restructure due to challenging economic conditions.

As mentioned previously, any company worth its salt wants to hold onto the good employees to help it survive, so they tend to come to a mutual agreement of cutbacks in salaries and bonuses. Other options are possibly shedding some of the fat (non performers) and cutback on spending and maybe look for a few redundancies as a last resort.

The problem with redundancies is that the good employees take them, head off to a new job with a nice big lump sum and the company is left with the non performers or the good ones who don't take the redundancy leave anyway as they prefer to leave on their own terms.

...or they cut and entire part of the business, and everyone in it.

LimeFruitGum

At the firm I was at during the recession, they didn’t try to enforce pay cuts to our contracts but they snipped at wherever they could. We were pretty much bullied into signing over 1 week’s holiday pay one year if we were to keep our jobs. They also stopped paying overtime. As people are let go/quit, you will soon find everyone’s workload increases as those roles won’t be backfilled. Or if they are, it’s by a contractor, or a more junior person, or moved to a low-cost location.
I was looking for other jobs during this time, but anything I had a reasonable shot at would have involved a pay cut.

Atlantic Dawn

I've experienced this where working hours got longer but wages remained the same, working day extended by 30 mins, not too much of an issue with it at the time in recessionville but a few weeks ago when they announce a proft of £100 million I wonder should they reverse these changes and respect those making the millions for them.

Manach

I've never come across salary cuts ( Multinational experience) but no annual increases, no expenses and the cutting of jobs with no backfilling was how they dealt with an economic downturn.

Paul_Mc1988

ToxicPaddy wrote:

The problem with redundancies is that the good employees take them, head off to a new job with a nice big lump sum and the company is left with the non performers or the good ones who don't take the redundancy leave anyway as they prefer to leave on their own terms.

This happened out in intel in 2015. Voluntary severance payment system was opened up but only offered to certain people based on a criteria. Many who were and are doing little to nothing wanted it but were not offered it. Many who didnt want it took it anyway as the payment was so big. The lads I worked directly with took a 120k and were in pfizer shortly after. Lucky bast**ds

KaneToad

28064212 wrote: »

Through mutual agreement...

Tell that to the public servants!

KaneToad

Mrs OBumble wrote: »

Shorter working hours is another approach.

Again, probably something you shouldn't mention in front of public servants!

Atlantic Dawn

You need to accept you are a disposable resource which could be disposed of at any time, never sacrifice family over employment as you can be cast aside whenever but time with family is unique.

skallywag

I know a very reputable company who managed to weather the storm from 2008 onwards by cutting all salaries by 5% across the board (you had the option to opt out if you wished, although I know of nobody who actually did though) but then offered more paid holidays in lieu. Nobody was made redundant and it actually ended up suiting many. As soon as the climate picked up again, normal levels were restored again.

Mrs OBumble

KaneToad wrote: »

Again, probably something you shouldn't mention in front of public servants!

Why?

They've still got voluntary shorter-working-year schemes.

Companies in a recession are quite happy to put people on a compulsory three day week ... which means 60% of both salary and hours.