Is it legal to reduce pay across the board?

For many organizations, across-the-board reductions in employee pay or reductions in employee hours are usually legal to institute. Many employees, though, are covered by contracts governing pay and those contracts must also be considered before instituting salary reductions.

Is it legal to cut the salary of an employee?

For organizations, tough market conditions or just an all-around poor economic environment sometimes leads to the need to cut employee salaries. For many organizations, across-the-board reductions in employee pay or reductions in employee hours are usually legal to institute.

Do you expect to get a pay cut?

For good reason, employees also tend to regard their pay as something that should only be increased, not cut or reduced. Employees also rightfully expect that their pay won’t be cut without warning, and then only for valid cause.

Do you have to give employees notice of salary cuts?

Many employees, though, are covered by contracts governing pay and those contracts must also be considered before instituting salary reductions. Before cutting the pay of employees working under contractual agreements, ensure reasonable notice is given and that required employee consent is obtained, if necessary.

Is it legal to cut pay for all employees?

Carefully. An across-the-board wage cut which applies to all employees presents the lowest legal risk because an employee will have a difficult time arguing that the employer treated them differently based on a protected characteristic, such as race or sex.

What should I do if I have to cut my salary?

Cutting salaries frequently stings employees and leads to drops in their motivation. If you’re forced to cut employee salaries consider instituting an incentive pay system to offer hope of regaining pay as well as possibly increasing employee motivation.