5 ms·

IANAL but it's not always illegal. If a company has a choice between going bust and imposing pay cuts on everyone then that is perfectly legal.

memsom 7y ago
If they follow the procedure in the UK, they can do this AFAIK. Though, they might need to make the position redundant and offer another position at a lower wage. Either way, it's a contract change.
- Silhouette 7y ago
  Claiming someone is redundant and then hiring someone else to do essentially the same job, but on worse terms and probably with a different job title or other deceptions to try to disguise what you're really doing, is a trick as old as the sun. UK employment lawyers and tribunals are likely to laugh you out of the building with an expensive lesson if you try it.
  - pinkfoot 7y ago
    Noone does that. What large companies do is hold a large minority stake in their group companies. Then they shut down the 'programme' in one company and move it, modulo some cosmetic changes, to another group company. Bitter experience.
    - Silhouette 7y ago
      Indeed. Larger businesses in the UK do have additional obligations when it comes to redundancies, but the system isn't perfect, for sure.
Silhouette 7y ago
Citation very much needed. I have never seen anything in UK employment rights law that says "unless the employer is in trouble". If the business is in danger of going bust because it can't afford to keep people on then it may need to make some of them redundant (and redundancy rights will then apply), but that's totally different to unilaterally changing the contractual terms of employment for the worse.
- barbegal 7y ago
  I believe s.98(1)(b) of the Employment Rights Act 1996 [1] allows dismissal for "some other substantial reason" which could be argued to cover this scenario and there is some case law such as Garside and Laycock Ltd v Booth [2] [1] http://www.legislation.gov.uk/ukpga/1996/18/section/98 http://www.legislation.gov.uk/ukpga/1996/18/section/98 [2] https://www.bto.co.uk/blog/refusing-to-accept-a-wage-cut-%E2%80%93-is-it-fair.aspx https://www.bto.co.uk/blog/refusing-to-accept-a-wage-cut-%E2...
  - Silhouette 7y ago
    Thanks for the interesting source material. It appears that the case in question has not yet been definitively resolved, though, and the argument made would contradict almost everything many employment lawyers have been advising for a long time about the implications of the ERA in this area. Notably, that includes a lot of advice given during the previous financial crisis just over a decade ago, when similar questions were widespread. The conventional legal wisdom seems to have been that mandating a pay cut is not allowed, because it's not a permitted deduction from wages and it's likely a breach of contract, and that firing someone just for refusing is not allowed either, because any decisions about who to let go if the business is in financial trouble are a separate matter that should be made objectively. That would mean without reference to the refusal by any given employee to accept worse terms of employment, and without conflating a position that might now be redundant with any employee currently holding that position who might also be able to work elsewhere in the business instead.

memsom 7y ago

If they follow the procedure in the UK, they can do this AFAIK. Though, they might need to make the position redundant and offer another position at a lower wage. Either way, it's a contract change.

Silhouette 7y ago
Claiming someone is redundant and then hiring someone else to do essentially the same job, but on worse terms and probably with a different job title or other deceptions to try to disguise what you're really doing, is a trick as old as the sun. UK employment lawyers and tribunals are likely to laugh you out of the building with an expensive lesson if you try it.
- pinkfoot 7y ago
  Noone does that. What large companies do is hold a large minority stake in their group companies. Then they shut down the 'programme' in one company and move it, modulo some cosmetic changes, to another group company. Bitter experience.
  - Silhouette 7y ago
    Indeed. Larger businesses in the UK do have additional obligations when it comes to redundancies, but the system isn't perfect, for sure.

Silhouette 7y ago

Citation very much needed. I have never seen anything in UK employment rights law that says "unless the employer is in trouble". If the business is in danger of going bust because it can't afford to keep people on then it may need to make some of them redundant (and redundancy rights will then apply), but that's totally different to unilaterally changing the contractual terms of employment for the worse.

barbegal 7y ago
I believe s.98(1)(b) of the Employment Rights Act 1996 [1] allows dismissal for "some other substantial reason" which could be argued to cover this scenario and there is some case law such as Garside and Laycock Ltd v Booth [2] [1] http://www.legislation.gov.uk/ukpga/1996/18/section/98 http://www.legislation.gov.uk/ukpga/1996/18/section/98 [2] https://www.bto.co.uk/blog/refusing-to-accept-a-wage-cut-%E2%80%93-is-it-fair.aspx https://www.bto.co.uk/blog/refusing-to-accept-a-wage-cut-%E2...
- Silhouette 7y ago
  Thanks for the interesting source material. It appears that the case in question has not yet been definitively resolved, though, and the argument made would contradict almost everything many employment lawyers have been advising for a long time about the implications of the ERA in this area. Notably, that includes a lot of advice given during the previous financial crisis just over a decade ago, when similar questions were widespread. The conventional legal wisdom seems to have been that mandating a pay cut is not allowed, because it's not a permitted deduction from wages and it's likely a breach of contract, and that firing someone just for refusing is not allowed either, because any decisions about who to let go if the business is in financial trouble are a separate matter that should be made objectively. That would mean without reference to the refusal by any given employee to accept worse terms of employment, and without conflating a position that might now be redundant with any employee currently holding that position who might also be able to work elsewhere in the business instead.