What would happen if I refused to take a pay cut?

Friday May 22 2020

I am among those lucky to still have a job in this coronavirus time. My company is in the essentials sector so it is almost business as usual for us. However, my employer has cut pay, including for those who earn peanuts. I think pay cut should only be for top managers with fat salaries. Can an employer force employees to accept pay cuts? What happens if they refuse to accept and get fired, does the law protect the employee in such circumstances? Hope

Dear Hope, I’m glad to hear you are one of a few who have managed to retain their job in this time of uncertainty. It is unfortunate pay cuts have to happen at all. However, given the nature of the operating environment, many organisations are trying to balance a number of priorities. Despite remaining open for business, there are aspects your employers have taken into consideration in making the decisions to cut pay. These may include a drop in sales revenue given many of your clients are not making volume orders, furthermore, a reduced operating time so the time allocated for operating at full capacity has been significantly reduced, bring deadlines earlier etc.

Doing this enables the business to generate some revenue as opposed to none. Given these parameters and in the spirit to remain operational and pay staff, adjustments have to be made to cut cost of doing business including paying staff. It sounds like your employer has been fair to cut all staff salaries regardless of the level one is placed at the structure. In order to determine unfairness, you would need to look at the percentage deduction. I believe employers have a responsibility to inform staff about why a pay cut is necessary, so all employees appreciate the bigger picture. If despite being informed of the dilemma an employee refuses to take the pay cut, then the alternative option is up for consideration.

The employee has a decision to make between being unemployed or keeping their job at a reduced pay. If an employee has been given a choice and decides to leave, it will be considered as terminating one’s employment contract. In regard to seeking redress from the law, those mediating will take all factors into consideration and note that your employer has not terminated you but rather given you an option and you have decided to leave. In my opinion, you would find it difficult to use the law to defend the decision you have taken given the context of the situation.

Caroline Mboijana
Managing Director
The Leadership Team (U)