Genrally the need to cut staff costs by 25% arises from a commensurate drop in orders. If 3/4 of the workforce works
4/3 as hard, they'll get the same amount of work done as before, which will be more than the company needs.
Better to cut 50% of the jobs and have the remaining staff work
50% harder. They'll then produce 75% of what they did before, which'll be just right, and moreover the staff cost per unit produced will be lower, allowing the company to reduce its prices, which in turn might help it retain its customers.
Not in the bounds of Employment Law it isnt, unless their is a specific, agreed, clause in the employment contract that states pay may be cut when Management feels necessary.
Whether the pay rate is stated or not in the Contract makes no difference, the usual weekly/monthly/hourly payment is the recognised payment for the job.
If the OP does not want to accept the pay cut, then he should write to the Manager/HR/personnel saying he will not accept the pay cut. They will then either pay him at the current rate,sack him, or make him redundant. (Yes, I know there are criteria to be met when making redundancies, but they can easily manipulate the requirements to ensure the OP is the one to go first). If he is scaked, then there is a very good chance of an Employment Tribunal ruling in his favour. Redundancy is harder to fight against. If he has been an employee for less than a year, he has virtually no rights. Up to the OP eventually. Take the pay cut, refuse it and likely to be out of a job, or gamble that they will keep him and pay the present rate. Alan.
If each of the staff has a unique skill, none of which can be dispensed with, that doesn't work.
The employer should really enter into discussions with staff when this sort of situation arises.
Many years ago in a small company I was working with (but not for), this sort of situation arose. I suspect management was quietly bricking themselves for a few months, but eventually told the workforce things were dire. Workforce went back into the office, and within a few minutes decided to ask the management if they could carry on working without getting paid that month. Management never actually thought to ask the workforce anything like this, but of course accepted the offer, and the company survived.
It's for exactly this sort of reason that consultations with staff should be undertaken. You may get staff volunteering for redundancy, or volunteering to take 3 months unpaid leave to undertake some project they've been thinking about for ages, or volunteering to go part-time.
Often, many options surface in such discussions which the management alone wouldn't have thought of, but which are beneficial to all sides and allow a company to get out of a temporary hole.
Sure, you can get rid of (100-X)% of them, and get the remaining X% to work Y% as hard for Z% of pay, and if you only need W% of work done, then you can fix it so that X/100 * Y/100 = W/100.
As you say, if W=75, then both (X=100,Y=75) and (X=75,Y=100) will fit the bill, as would any other (X,Y) for which X*Y=7500.
But ideally you want to drop the requirement for Z=Y. You want to make the work force more cost-efficient by making Z
Who made that a requirement? I was rather trying to make suggestions to keep Z=100, ie salaries remain the same. That might be what (the majority of) the employees want?
"Ronald Raygun" wrote
But that means X=100 (same number of staff), Y=75 (each working three-quarters as hard : @W=75) & Z
You did, implicitly, that's the impression I gained. You said "either
*all* [can] work 75% as hard for 75% pay" (i.e. X=100,Y=75,Z=75) "or 75% of them can work 100% as hard for 100% of pay" (i.e. X=75,Y=100,Z=100). Notice how in both cases Y=Z.
That's what you suggested initially [25% lose jobs, rest work 33% harder], but later you added more suggestions.
Of course it's what they'd want ideally, but they'd be selfish, knowing that this is only possible at the expense of the minority who then get laid off. Naturally every single one of them would then want to be in this majority, but they'll soon change their tune when they find they've been selected to be in the minority.
Couldn't cope? They should jolly well consider themselves lucky they're not being expected to cope with a drop in income of 100%! That's the whole point - avoiding some of them facing layoff by all of them taking a cut.
Indeed you could, but you don't want to increase Y, because I've approached this from the premise that it's better to let everybody take a P% salary cut than to let P% of everybody take a 100% cut while the remaining (100-P)% keep their salaries the same.
Solidarity is meant to be the cornerstone of trade unionism, but when push comes to shove, that all goes out the window and it's every man for himself!
Not quite. I want to increase *and* decrease productivity, but measured in different scales. I want each person to produce more per hour but less per week, keeping pay per hour the same, but cutting the hours worked per week.
The idea is for the employer's overall salary bill to go down by a bit more than the drop in turnover.
I first set Z to 100 (no salary drops), which means that X can be at most 75 - otherwise the total payroll exceeds the amount available.
Next there is a choice of (A) setting X=75 (25% loss of jobs) and Y=100 (work 100% as hard), OR (B) keep fewer jobs (X100), for the same pay.
You seem to agree that it's better to keep X as high as possible, and Y as low as possible, so that means X must be 75 & Y must be 100.
"Ronald Raygun" wrote
I only added one more suggestion (X=75, Y=100, Z=100), and compared it with the OP's employer's suggestion (X=100, Y=75, Z=75).
"Ronald Raygun" wrote
That isn't necessarily a bad thing : those that are let go might find a similar job elsewhere, or re-train & start a new career, or set up on their own account - and that way the entire workforce might continue on the same income as before.
Some might be close to retirement and take the oppotunity to retire a little early.
"Ronald Raygun" wrote
Not necessarily - see above.
"Ronald Raygun" wrote
For some people, even a drop of 25% might mean that they can't keep up with the bills and therefore might consider it as bad as losing 100%.
"Ronald Raygun" wrote
But that might mean that then they *all* can't pay their bills?
"Ronald Raygun" wrote
You'd prefer 100% of the staff not to be able to pay their bills, instead of only 25% of them? [And that is possibly "worst case" : some of the
If some of the staff want to choose to leave at that time (as they were going to retire soon anyway), then fewer of the remaining staff will need to be compulsorily laid off.
I wasn't suggesting that the staff near to retirement are "made redundant", but simply that they might make the decision themselves to leave a little early.
Yes I want to keep X as high as possible, but I don't particularly want to keep Y as low as possible, other than as a consequence of W=75 and the pointlessness of producing more than can be sold.
Clearly we are approaching the problem from different and incompatible premises (I want to avoid layoffs, you want to avoid pay cuts), so it's not surprising we are having difficulty agreeing.
That's a perfectly reasonable supposition in theory, but in practice and in the current economic climate I suggest it's overoptimistic. If there were enough demand for similar work, the company shouldn't find it difficult to tender for it and shouldn't be in the position of having more staff than they need. Likewise now is probably not the best time to consider bold career moves, especially if you're one of the few for whom a 25% pay cut would be unthinkable.
Indeed they might, but it's hardly likely that this contingent would make up anywhere near 25% of the workforce. On the other hand what they lack in number they might make up for slightly in terms of their slice of the salary cake, i.e. people nearer retirement are likely to be on higher salaries than new recruits and most folk inbetween.
I know you only said "for some", but I don't accept that this is likely to be true of many. I think most people would have no trouble tightening their belts enough to face a 25% drop in income, especially if there is some prospect of the situation being temporary.
Two things mitigate here: One is that due to the way the tax system works, a 25% cut in gross pay translates to a slightly smaller fractional cut in net pay, the other is that we are in a deflationary episode, so a small pay cut need not reduce standard of living at all. So we're really looking at an effective cut of somewhat less than 20%.
Nah. They'd just need to avoid racking up too many sizeable new bills. Turn down the heating a bit, cancel the 2nd annual holiday in the sun, eat in more, that sort of thing.
You're pushing this point too hard. I don't accept it.
They might, but the likelihood is really quite low, I suggest.
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