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Old 14.04.2020, 09:00
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CoVid related: voluntary [or not] salary reduction

Hi all! I am working for a big corporation which has been impacted by CoVid. Since this means that they are having issues with cashflow, through an email HR asked middle to top employees to make a contribution by agreeing to a salary reduction. Percentage of contribution changes according to grade and we would still work full time, so no hours reduction. HR sent us all a contract that we are either asked to decline or accept. I would like to know whether they might wave this as a reason for dismissal if the situation gets worse? Is it legally allowed to do this?

PS: at the same time they will not get us into reduced working hours and use federal help as they stated that this is not the right measure for our company.
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Old 14.04.2020, 10:39
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Re: CoVid related: voluntary salary reduction

Yep, it is legal and they do not need a reason to dismiss you.
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Old 14.04.2020, 10:46
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Re: CoVid related: voluntary salary reduction

To answer your question, yes it is legal to do so. Out of curiosity, is the contract they've offered you a temporary one? Has a date been set when you will return to normal salary level? Or have they offered to compensate you for your pay cut in future once things return to normal (i.e. if you go to 90% now, will you get 110% for the months that you were on reduced money in future?)
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Old 14.04.2020, 11:15
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Re: CoVid related: voluntary salary reduction

Reducing hours is legal, but reducing hours while asking to work full time is not.

I'd take as a red flag if the news arrive from HR instead of direct manager. Maybe, covid19 is just used as a excuse to reduce number of employees without explicitly firing them.

Also, it is very strange that they leave written evidence (email) of something illegal. As TonyClifton mentioned, is there something written about future compensation?
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Old 14.04.2020, 11:34
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Re: CoVid related: voluntary salary reduction

Thanks for your answers. To clarify, they are looking at reducing pay (on a voluntary basis) while NOT reducing working hours.

They did state an approximate time by when salary loss will be compensated, but this is depending on whether cash flow "normality" is back (this is also written in the contract).

The contract that was offered is on a 4 month basis but they also said they could extend this measure (they would advise us and ask once again whether we would want to contribute or not)

What I am worried about is that they could decide to fire people on the basis that they did not "volunteered" to take part into this. I am not really in the position of doing so as my salary is peanuts already.
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Old 14.04.2020, 11:41
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Re: CoVid related: voluntary salary reduction

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Thanks for your answers. To clarify, they are looking at reducing pay (on a voluntary basis) while NOT reducing working hours.

They did state an approximate time by when salary loss will be compensated, but this is depending on whether cash flow "normality" is back (this is also written in the contract).

The contract that was offered is on a 4 month basis but they also said they could extend this measure (they would advise us and ask once again whether we would want to contribute or not)

What I am worried about is that they could decide to fire people on the basis that they did not "volunteered" to take part into this. I am not really in the position of doing so as my salary is peanuts already.
If your salary is "peanuts" and you would be worried about money then do not sign it and explain that you have financial commitments which do not able you to take a salary cut and maintain the same standard of living.

Will it in some way be held against you vs other people that voluntarily contributed? Well yes, use your common sense, of course it will. There will be always be those who volunteered for a salary cut in a time of company need... and those who didn't.
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Old 14.04.2020, 11:58
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Re: CoVid related: voluntary salary reduction

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What I am worried about is that they could decide to fire people on the basis that they did not "volunteered" to take part into this. I am not really in the position of doing so as my salary is peanuts already.
Your first post said that your employer was asking people in the middle to top tier to take a cut... now you are saying your salary is peanuts... which is it?

If they don't manage to sort their cashflow issues out this way, then you can expect that next round will be redundancies... it should come as no surprise in such a situation that they will want to keep the people who stepped up when the company needed them. And in any case they don't need to give you a reason, all they need to do is follow the termination terms set out in your contract.

If you don't want to accept a reduction and you get terminated, what is your alternative? Will you qualify for unemployment benefits?
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Old 14.04.2020, 12:07
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Re: CoVid related: voluntary salary reduction

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If you don't want to accept a reduction and you get terminated, what is your alternative? Will you qualify for unemployment benefits?
You also need to be careful if you would accept and will be terminated anyway, as the reduced salary is likely to impact the base for unemployment benefits.
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Old 14.04.2020, 12:07
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Re: CoVid related: voluntary salary reduction

Ok, so. What I mean my middle - is a salary between 90 to 100k a year. On the other hand, executives are on a scale of 5 levels above in terms of hierarchy. So as you can see it is quite spread out.

Of course they don't need a reason to fire people, but to use this as a basis without considering 1) level of wage (which as I explained varies greatly) and 2) financial commitments and family situation (people would maybe also need to provide for kids/significan other) to me is deeply unfair.
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Old 14.04.2020, 12:12
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Re: CoVid related: voluntary salary reduction

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Ok, so. What I mean my middle - is a salary between 90 to 100k a year. On the other hand, executives are on a scale of 5 levels above in terms of hierarchy. So as you can see it is quite spread out.

Of course they don't need a reason to fire people, but to use this as a basis without considering 1) level of wage (which as I explained varies greatly) and 2) financial commitments and family situation (people would maybe also need to provide for kids/significan other) to me is deeply unfair.
90-100k is not peanuts, it is cashews at least.
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Old 14.04.2020, 12:21
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Re: CoVid related: voluntary salary reduction

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You also need to be careful if you would accept and will be terminated anyway, as the reduced salary is likely to impact the base for unemployment benefits.
Good point, I would really check this with RAV before signing anything.

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Ok, so. What I mean my middle - is a salary between 90 to 100k a year. On the other hand, executives are on a scale of 5 levels above in terms of hierarchy. So as you can see it is quite spread out.

Of course they don't need a reason to fire people, but to use this as a basis without considering 1) level of wage (which as I explained varies greatly) and 2) financial commitments and family situation (people would maybe also need to provide for kids/significan other) to me is deeply unfair.
Then don't do it and state your reasons to them as much as you are comfortable doing so.
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Old 14.04.2020, 12:27
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Re: CoVid related: voluntary salary reduction

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What I am worried about is that they could decide to fire people on the basis that they did not "volunteered" to take part into this. I am not really in the position of doing so as my salary is peanuts already.
They do not need a reason to fire you. If they decide they don't like you, they can do so regardless of what evidence they may have or not have against you.

In my opinion the crux of the matter here is trust.

Do you trust that they are acting in good faith and that your sacrifice can contribute to saving the company and your job?

Or do you smell a rat? And if so, how do you feel about continiung to work for a company that you don't trust?
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Old 14.04.2020, 12:46
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Re: CoVid related: voluntary salary reduction

It looks to me that they want permission to, effectively, pay part of the salary late. If that's the case, and you want to make sure it is, there's nothing illegal about it as long as you agree. It's as if you were asking for an early payment of part of your salary because <cash problems for whatever reasons>, just with reversed roles. I don't see a problem as long as you have enough reserves to easily fill the gap.

However, I would not give the company the right to decide when the balance gets paid out. Instead I would need a "latest date" sometime this(!) year the outstanding balance must be paid by regardless of the company's financial state. You can always agree to an additional extension if necessary and Ok for you, but the decision must remain yours.

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PS: at the same time they will not [..] use federal help as they stated that this is not the right measure for our company.
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Old 14.04.2020, 19:26
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Re: CoVid related: voluntary salary reduction

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It looks to me that they want permission to, effectively, pay part of the salary late. If that's the case, and you want to make sure it is, there's nothing illegal about it as long as you agree. It's as if you were asking for an early payment of part of your salary because <cash problems for whatever reasons>, just with reversed roles. I don't see a problem as long as you have enough reserves to easily fill the gap.

However, I would not give the company the right to decide when the balance gets paid out. Instead I would need a "latest date" sometime this(!) year the outstanding balance must be paid by regardless of the company's financial state. You can always agree to an additional extension if necessary and Ok for you, but the decision must remain yours.

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Why is federal help not a viable option for your company?
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Old 14.04.2020, 20:12
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Re: CoVid related: voluntary salary reduction

Interesting situation OP. Most companies I've had my experience with, start deducting at the absolute bottom of the pecking order.

I would find out, whether it is possible to get your entire team acting in unison. Being the only person to accept or decline may or may not put someone in the hot seat and hence, I'd rather move along with a herd in this case.


PS: Are they hiring?
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Old 14.04.2020, 20:17
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Re: CoVid related: voluntary salary reduction

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Why is federal help not a viable option for your company?
The company will need to reimburse the federal help in case they fire workers. The federal help is to keep workers employed, not fire them.
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Old 15.04.2020, 00:43
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Re: CoVid related: voluntary salary reduction

What reduction is being requested? I'm sympathetic, and would be unhappy to be asked to give up any amount, but it would make a difference if it was 1-5% compared with (say) 30%.
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Old 16.04.2020, 11:09
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Re: CoVid related: voluntary salary reduction

Another question just came to me, why haven't your company registered for the furloughing/kurzarbeit scheme if they consider this to be a short term issue? Seems a little odd to ask you to take a temporary pay cut when they can get up to 80% of salaries paid? It sounds to me like they want to have their cake and eat it, ie have you working full time for less pay.

Dear Baghelforbreakfast, in the end it's a decision that only you can make, if you like your job and the company and can afford to take the financial hit, then I would suggest you agree to their proposal. These tough times will soon affect everyone many and you may then be grateful that you still have a job.

On the other hand, if you deem what they're asking to be unfair and you cannot afford it, then refuse the offer. Just be aware that there could be consequences, your job being one of them!
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Old 16.04.2020, 11:52
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Re: CoVid related: voluntary salary reduction

On a second thought, also consider another risk: if they ask for 10% today, why not 20% next month, and then firing people anyway because the "situation has not improved".

If that's the case, you're anyway out of work but with a more disadvantaged position since unemployment benefits are the highest of the average of the last 6 months or the last 12 months.

I don't know if it's crazy to ask to add a few lines in the new contract in case you're made redundant to compensate for the "lost" unemployment benefits due to the reduced salary. Should be a few hundred francs of unemployment income before taxes, not negligible at all.
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Old 16.04.2020, 12:05
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Re: CoVid related: voluntary salary reduction

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Will it in some way be held against you vs other people that voluntarily contributed? Well yes, use your common sense, of course it will.
On the other hand, taking the cut will in no way protect you. It's a rare company that really has any loyalty towards staff.

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Why is federal help not a viable option for your company?
Possibly, they want people to work full time, but just not pay as much. Short hours doesn't allow this.
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