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Your rights on pay cuts

As pharmacy businesses battle against financial pressures, wages will come under scrutiny. Solicitor Mark Stevens explains what you need to know

The start of 2013 has seen no end to the challenges facing pharmacy. And, as businesses battle against financial pressures, staff wages will inevitably come under scrutiny.

More than one in 10 pharmacy employees who didn't receive a pay rise last year took a pay cut instead, the C+D Salary Survey 2012 suggested – and the next few months are unlikely to see much improvement. So what are your rights when faced with a cut to earnings? Solicitor Mark Stevens explains what you need to know.

What should employers do before cutting pay?

"In principle, an employer can't impose a unilateral pay cut. Whether you're on a permanent or temporary contract, they should always seek your consent.  

In most cases, an employer will try to obtain your agreement, as it's the easiest way to implement a pay cut. But if you don't give written consent, your employer will need to start a consultation process discussing their reason for the proposed reduction.

The consultation process should give you the chance to ask questions and raise any concerns or objections. Your employer will need to make a sound business case for the pay cut and you should ask to see some evidence that the reduction is necessary, perhaps through a review of accounts or financial documentation."

What should I do?

"Engage with the consultation process as far as possible. You can then seek to establish your employer's reasons and determine whether they are supported by evidence. Also, by raising your objections and making suggestions during the consultation process, you may be able to influence your employer's decision – it may be that a less harsh pay cut can be agreed, or a temporary reduction.

Where they are able to make a sound business case for the pay cut, you may be better off accepting it rather than facing other cost-saving measures, such as compulsory redundancies or the insolvency of the business in the future.

If you don't accept, your employer is likely to warn that a continued refusal may result in dismissal. Depending on the extent of consultation and the soundness of the business case for the proposed pay cut, they may be able to fairly dismiss you and re-engage you on the new pay terms."

What if my employer forces a pay cut?

"If your employer enforces a pay cut without seeking your agreement, or by terminating your employment and re-engaging you on new terms, you have two options. You can either write to your employer making it clear that you're working under protest, or resign on the grounds that they've breached their contract of employment.

If you continue to work under notice, you may pursue an employment tribunal claim seeking the difference between the wages before and after the pay cut.

If you choose to resign, you could pursue a constructive dismissal claim alleging you had no option but to resign as a result of the unilateral pay cut. An unfair dismissal claim in these circumstances will not be without risk, as an employment tribunal may have some sympathy for an employer who has a sound business case."

Mark Stevens is a solicitor at Veale Wasbrough Vizards

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