If an employer tries to cut your wages, it must be done with your agreement or it is considered breach of contract. If an employer asks you to take a pay cut, it is important to know your rights according to UK employment law. It is also useful to know what you can do if things go wrong.
During difficult economic times it may happen that an employer will ask you to take a pay cut. It is possible that everybody working for the company might be asked to take a pay cut, in order to keep the company afloat and prevent job losses. Alternatively the employer might ask to cut your pay for reasons which are less clear. Whatever the circumstances, you do not by law have to accept a pay cut.
Agreeing to a pay cut
It may be that a pay cut is proposed only for a short period. If this is the case, and you agree to a temporary pay cut, you must obtain a written agreement to this effect. A written agreement will protect you in case of problems further down the line. If the proposed pay cut would reduce your hourly pay to below the national minimum wage, then the employer cannot lawfully lower it, even if you agree.
Refusing a pay cut
If your employer cuts your wages without asking you, or cuts your wages after you have refused to accept a proposed pay cut, then the employer is in breach of contract. If this happens you have the right to take your case to an employment tribunal. Be aware that is not permissible in law for an employer to dismiss you or for refusing to take a pay cut; if this were to happen, you could again take the employer to a tribunal for unfair dismissal. Neither is the employer allowed to dismiss and then re-hire you at a lower rate of pay.
If things go wrong
If pay cuts seem inevitable in your workplace, it is important to remember that you do have rights, and you do not have to accept it. In some instances you may find yourself in a position to negotiate, so that you receive some improvements in conditions in return for the reduced pay. In other circumstances you may feel you have few powers of negotiation, and are powerless to act. In such a situation you should seek free advice from the Citizen's advice Bureau or the mediation service ACAS, who will advise you of your particular rights and guide you towards appropriate action.