Can an Employer Legally Reduce Your Pay Australia

If you are an employee eligible for the JobKeeper program and you receive JobKeeper payments, your employer can give you a “JobKeeper withdrawal directive”. A salary reduction cannot be implemented without notifying the employee. If an employer reduces an employee`s salary without notifying them, this is considered a breach of contract. 

If you find yourself in such a situation, please contact the Workplace Advice & Support team for individual advice via email: here is a basic guide to some of the working conditions your employer may ask you to give up and whether this is allowed. If a bonus or company agreement applies to your job, it is likely that certain minimum conditions and rates of pay are protected and your employer will not be able to avoid or change them. These are difficult times for business owners, and employers are looking for ways to keep all their employees at work, but don`t have the financial resources to continue paying employees their full salary. It`s tempting to ask everyone to take a 10% pay cut to keep the company afloat. But can you ask your employees to accept a pay cut and, if so, should they agree? If you are an employee who is not protected by a collective agreement or employment contract, there is no fixed amount you have to pay. However, employers cannot lower wages below the minimum wage in their state. Companies are asking their employees to take annual leave during the pandemic, but many don`t want to use their vacation balances at this time.

Here`s what your boss can and can`t ask of you. It is important to note that a dismissal is only genuine if an employer no longer requires a role to be performed by anyone due to changes in operational requirements. As part of this assessment, you may need to consider the company`s financial performance, technological advances, or structural changes within the company. If you continue to work without disagreeing, your employer may argue that you have accepted the change through your behaviour. Dismissal If your employer is unable to pay your full salary, it may be possible to claim that your position has been dismissed and that you are entitled to severance pay. An employee`s position is superfluous if his employer no longer requires that the position be held by anyone. If your location (i.e. to wages and hours of work in your employment contract) no longer exists, because your employer is no longer able to pay your full salary, this situation may fall within the definition of dismissal.

You may first want to determine what you are entitled to severance pay to under a company agreement (if you are covered by an agreement), your employment contract, or the Fair Work Act 2009 (Cth). with severance pay. With Brexit and other global events shaking up the global economy, businesses can prepare for tough times. While we often hear about downsizing as a way for companies to cut costs in an acidic economy, some companies may choose to cut back on the money they pay workers instead. Is it even legal? Are there no laws to protect your wages? Let`s find out. Jim Stanford of the Centre for Future Work said workers whose employers fall into this category can reduce their income by 40% or more. Since a reduction in working hours would be a significant change in the workplace with a significant impact on the employee, you will need to go through the consultation process and modern rewards required by the Fair Work Act, 2009 to talk to your employees about reducing their hours. With regard to the termination of the employment relationship, some contracts may allow the employer to withdraw the offer at any time before the start date. However, other contracts may require the provision of a notice period or payment instead of termination to terminate the contract before it begins. As a result, you may be able to request payment of the notice period. Before you reduce an employee`s salary, you need to know your minimum obligations under bonuses and company agreements.

The corresponding bonus or company agreement (if applicable) sets the minimum wages and conditions. You are not allowed to pay an employee less than is required under the applicable award or company agreement, and there are significant consequences if you do it wrong, including civil penalties and payment arrears. Professor Stewart said the Fair Work Commission could also sign an outsourcing agreement that would result in the loss of some existing staffing conditions or reduced rates of pay, “but that`s usually not the case.” Your employer doesn`t need a reason to cut your pay or reduce the hours you`re supposed to work. Unfortunately, in most cases, employers can cut your salary or reduce your hours because most employees are “hired at will.” Step Two: If there is no contractual right to reduce an employee`s salary, the employer could ask the employee to accept a wage reduction. It is unlikely that the employee will accept a pay cut, but if there are legitimate business reasons for the pay cut, you might have a better chance. For example, during the CCA, many companies took various measures to reduce their payroll by laying off employees, introducing flexible work arrangements, transferring employees from full-time to part-time employment, reducing hours (e.g.B employees who take half a day), by reducing the days (p.B. employees working 4 days instead of 5 per week) and/or freezing salary increases. If an employee understands that there are legitimate business reasons for the pay cut, they can accept it instead of risking losing their job.

Have you found yourself wondering if something is legal or not? Let us know and maybe we can do it in our next Is It Legal? Characteristic. “This is a legitimate approach on the part of employees and the employer, and in my opinion, there should be no criticism of it. One could even say that this is the kind of joint effort of workers and employers that should be encouraged by this tribunal. Unfortunately, not all employers and employees are able to work together constructively in this way to save a company and a significant number of jobs. Actions taken by your employer to reduce or hire your salary without your consent may also result in dismissal. We recommend that you seek urgent legal advice if you find yourself in this situation. There are a few exceptions to the minimum wage rules, but you can`t get less than the minimum wage rate for your classification in your state. “There is nothing wrong with an employer pointing out to its employees the consequences of maintaining existing wages and working conditions.” If an employer attempts to reduce an employee`s salary and does not have the right to do so, this would constitute a breach of contract and could also constitute a violation of the employee`s rights in the workplace. Such a violation would allow the employee to take action against the employer for breach of contract or to take steps to protect his or her rights in the workplace, which could result in higher costs to the employer in the long run than if the employer had not taken the action.

Such a measure should be carefully considered. LegalVision`s team of employment lawyers is ready to review all employment contracts, so contact us at 1300 544 755 and get a fixed fee quote today. “In short, layoffs are not the only option for employers going through difficult times. The FWC has shown its support for employers who are willing to really work with workers to save a company and jobs, even if the solution involves temporary wage cuts at all levels. Have you ever wondered whether, as an employer, you can legally reduce an employee`s salary? This is not an unusual question. .

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