I work for a small business, and the owner has told me that because of a downturn in the amount of work, he needs to reduce my salary. I don’t think this is right. Can you help?

I work for a small business, and the owner has told me that because of a downturn in the amount of work, he needs to reduce my salary. I don’t think this is right. Can you help?

A reduction in pay requires a change in a contract and for this to be binding, consent from both parties is required.

However, employers will often have the upper hand with bargaining power if there is a risk of losing your job. It is illegal for them to deduct pay without a contractual change occurring.

Contract Term Variation

Firstly, you should check if your contract has a variation term that lets your employer change your pay. This should be specific to what they want to change and not a general statement that gives them discretion to alter as they wish.

If you decide that you want to object to the change, you need to notify your employer straight away, otherwise it may be seen that you have agreed to the change by not objecting. 

You should write an informal letter outlining your objection and any solution that may be available, ensuring that you date and sign the letter.

What do I do if this does not resolve the situation?

If this does not resolve the issue, then you can raise a formal complaint in the form of a grievance for your employer to investigate.

Your company grievance policy should outline the process that you should follow, but because you work for a small company, the grievance will probably be handled by the owner.

You should clarify in writing if you see the cut in pay as an unauthorised deduction.

Further Action that can be taken

Other actions may be available to resolve the issue further down the line, including claiming an unauthorised deduction of wages at an employment tribunal; taking action for damages through the Sheriff court; or claiming breaches of contract at an employment tribunal if you were to no longer work for the employer.

There is also the option of leaving the job and claiming constructive or unfair dismissal or claiming discrimination if the reduction was due to any protected characteristics.

It is important to remember that if you are dismissed and have not worked for your employer continuously for at least two years, you cannot take them to an employment tribunal unfair dismissal unless the reason is automatically unfair.

When is a dismissal unfair?

A dismissal will only be automatically unfair if it is because of pregnancy or maternity; family reasons; representation; trade union membership or recognition grounds; pay and working hours; part-time and fixed-term employees who are not treated the same; or discrimination of a protected characteristic.

If the dismissal is for a reason that is not automatically unfair, then you are limited with what action you can take if you have worked there for less than two years.

If your employer doesn’t give you notice, notice pay or does not follow the correct procedures, you may have been wrongfully dismissed.

This is a contractual claim rather than a statutory right, and you would have to show that your employer had broken the terms of the contract of employment.

It does not matter how long you’ve worked for your employer to take a wrongful dismissal claim to tribunal. However, it is always best to speak with your employer informally first to try and resolve the problem.

Where can I get further information / advice?

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For more information, visit www.advice.scot, or call 0808 800 9060 (Monday to Friday, 9am-5pm).