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Can we reduce an employee’s salary?
Labour Bulletin | 14 May, 2009 | Hot Topics:
Inside this issue...
- Firing? Failing to follow fair procedure means you lose and
your employee scores!
- Retrenchment: what are YOUR rights?
- Can we reduce an employee’s salary?
Dear reader,
Hello from me, for the first time in our new and improved Labour Bulletin.
I hope all you mothers out there were spoiled on Sunday...starting with a huge, charmingly charred breakfast in bed? Lovely, until you saw the kitchen! This week was significant for another reason: it marked the appointment of our Government’s ministers. There were a few surprise appointments, but Membathisi Mdladlana still holds the reins as Minister of Labour.
In the coming months we’ll see whether our Government plans to fulfil all the election promises it made. We promise to keep you up-to-date with any developments as and when we hear them.
Can we reduce an employee’s salary?
Question
Can we reduce an employee’s salary because of a decrease in their workload?
Answer
You must negotiate any reduction to salary and get the employee's written agreement as you’re essentially changing his original contract. You need to explain the need for the reduced workload (which must be fair, for business reasons) and the pro rata salary reduction.
Also consider retrenchment i.e. consult about the need to change the job's duties. Offer the reduced job and salary as an alternative to retrenchment (or another suitable post as a reasonable alternative to termination if available).
If the employee accepts the altered job and pay, you’ve successfully changed the contract of employment and should put it in writing. If the employee refuses the new, adapted job, you can retrench without the need to pay severance pay if the employee unreasonably refused the offer of the changed job and pay.
It would be reasonable for the employee to refuse it if, for example, you reduced the salary by a significant amount (e.g. in half), but not necessarily if the reduction was less significant (e.g. a 15% drop). There’s no fixed number or criteria: the Courts look at each case individually and from the particular facts determine what is reasonable or not in each matter.
Yours sincerely,
Lucelle Buchler
Editor-in-Chief: Labour Watch Newsletter
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Editors note
Michelle Govender
Labour Bulletin Editor
The Labour Bulletin team speaks to subscribers every week on landmark labour events and offer valuable and practical information from the Handbook, from questions and answers and from our experts that subscribers can use now to benefit their business.
