If an employer cuts pay without notifying an employee, it can be considered a breach of contract, depending on if there’s a contract involved. If you cannot, then an alternative approach would be to reinstate the employee to her original position or an equivalent one and specifically discuss her performance problems and give her an opportunity to improve. “If you demote someone and you can’t establish just cause for demotion it’s going to be constructive dismissal.” Documenting all the steps you took to support the employee is a good defensive step, but the right approach with the individual could help your organization avoid a lawsuit all together. Check when you can claim money back from an employee, for example overpayments or training costs. Any income earned will be deducted from your claim. A salary reduction can’t occur unless you notify the employee of the pay cut first. In fact, there are two legal avenues that employers can pursue in order to persuade their employees to accept a change in pay or working conditions, Marinus says. If they don’t agree, you must pay them the full amount for their normal working hours as stated in their employment contract, even if you have no work for them to do. There could be plenty of reasons why their performance is … Reducing An Employee’s Pay Unilaterally. If you don’t follow these basic rules, you could end up in a labor court defending a decision that may seem appropriate but which may lack certain legal requirements. An employer can decide for itself who to hire or employ. Before you decide what to do, you and the employee’s manager should sit down with her in an interactive process meeting. The employer can be wrong, stupid, or unfair, and it's not illegal. I recently found out that the company owner boss is going to demote an employee to a lower position. If your demotion plan is centered on the employee attitude or performance, it will not solve the challenge yet. However, before an employer can demote and employee they are obliged to follow a fair procedure. Therefore, if the employee chooses to reject the demotion, their employment may be terminated. Your case is different, the demotion is performance related, not how long you hae been an employee, and so your pay can be reduced to the level you will now hold. If you are demoted without notice, you could be frustrated because this often leads to a cut in pay or fewer work hours. For example, you can offer them reduced hours or increased annual leave entitlements. However, the reduction can't go below a certain salary level for the employee's job group, and employees are aware that low performance ratings can have an effect on their salaries. These protected rights include: workplace rights; taking or not taking part in industrial activities or belonging or not belonging to an industrial association; being free from discrimination. Most employers can reduce an employee’s pay as long as: 1) they tell the employee first 2) It’s not a case of discrimination 3) The pay cut isn’t breaching a contract 4) the pay cut doesn’t reach below minimum wage. There's not enough information here to provide you with a good response. You will then lose entirely; Consider the cost of losing. In that meeting, you can explain why working from home in her current capacity is not feasible and brainstorm other options with her. 2014 will be a fat-trimming year and a year in which goods and services become more expensive. You may also have the right to a severance package, depending on the policies of your employer. If your business needs to cost-cut, you can offer your employees benefits to make up for reducing their wage. 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