Can an employer impose a pay cut on financial grounds?

A recent case in the Liverpool Employment Tribunals has highlighted the risk for employers in unilaterally imposing pay cuts on employees in response to a downturn in business.

Mr Decker was a branch manager for a recruitment agency, Extra Personnel Logistics, specialising in driver recruitment for the logistics industry in Merseyside. He commenced employment in December 2008. On commencing his employment he worked 40 hours a week flexibly between 7.00 a.m. and 7.00 p.m. Monday to Friday. In July 2015 it was agreed that his working hours would be reduced to 32 per week. It was also agreed that he would be released from on call duties, other than covering holidays and emergencies.

On 20 February 2017 he was asked by the managing director, Brad Richardson, to reduce his working days from four to two (32 to 16 hours), equating to a loss of £205.95 per week. The following day Mr Richardson wrote to him, confirming the reduction to Mondays and Tuesdays only. He gave the reasons as the loss of two contracts and the industry market being quiet. The letter also informed him that the consultation period for the contract would run until 6 March, following which a meeting would take place the following day. Mr Richardson also referred to an offer of six additional hours doing sales which, although it had been declined by Mr Decker, would remain open for discussion.

On 3 March Mr Decker wrote to Mr Richardson to inform him that, due to his financial circumstances, he could not afford any reduction in his existing working hours and that he was willing to discuss matters further at the meeting on 7 March.

At the meeting Mr Richardson said that, as a result of the resignation of Mr Decker’s daughter in law (who had also been offered a reduction in working hours), he could offer a further eight hours per week. However, that was subject to him resuming on call work. Mr Decker said that he would accept the reduction from 32 to 24 hours if his day rate was increased from £102.97 to £110.00, on the basis that this would assist the employer in achieving its cost-cutting objective.

No agreement was reached at the meeting.

Ministry of Justice confirm huge increase in Employment Tribunal claims

I’ll start with the big headline: Employment Tribunal claims (brought by individual Claimants) increased by 90% in the period between October to December 2017 (in comparison with the same period in 2016). To cut a long story short, the recent abolition of Employment Tribunal fees has led to Tribunal claims nearly doubling.

A small disclaimer is that the above statistic is currently a provisional figure, however, in reality, that figure tallies with my own expectations and experience over the past 12 months.

These statistics are slightly ironic given that, before the Supreme Court found Employment Tribunal fees to be unlawful, one of the main reasons the lower courts refused to find Employment Tribunal fees unlawful because there was ‘no evidence’ of the fees preventing individuals from accessing justice.

EAT Judgment: There can be no disability-related harassment claim without first establishing the disability

In the recent case of Peninsula Business Service Ltd v Baker, the Claimant had advised his manager that he had dyslexia and had also provided a psychologist’s report confirming the diagnosis. The Employer’s occupational health provider prepared a report confirming that the Claimant was likely to be considered disabled and recommended reasonable adjustments, however the Claimant’s…

ACAS early conciliation certificate can relate to a claim where the claimant resigned after the certificate was issued

Many employers will by now be familiar with the ACAS Early Conciliation (EC) process which was initially introduced in April 2014.  The concept of Early Conciliation is that ACAS will attempt to resolve any potential claim before it is formally submitted to an Employment Tribunal – indeed it is now the case that claims must…

right to request flexible working extended to most employees

Most employers are familiar with the procedure to be applied when dealing with flexible working applications which have been around, on a legislative basis, since 2003. Initially the right to request flexible was confined to the parents of children under six or of disabled children under 18. In 2007 the right was extended to carers of adults…

new (or maybe not so new) proposals to "streamline employment law"

In our June newsletter I outlined what changes were to be expected as a result of the Government’s review of employment law. If anything, what has now emerged is an even more diluted version of what was anticipated in the sense that the proposed changes will be the subject of numerous consultations, rather than firm…