My employer recently announced a 10% pay cut across the board. Where I live(South Africa), employee consent is required.
The company sent out a document asking us to sign in agreement.
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This is the state of things now:
* Company laid an unknown number of employees off, and laid them off without letting employees know until a week later in a meeting where they announced pay cuts
* The company is pretty much full remote and the office is a nice-to-have. It is in a very expensive part of town.
* Lunches once a week are catered at the office
* I asked what happens if one were not to sign, and the response was "Oh, we haven't thought about that. We're hoping that everyone pulls together."
* The situation will be reviewed quarterly
* Company says they don't expect it to last very long, also citing this for why they kept the office
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A few things stand out to me and feel like red flags, namely:
* They chose to cut salaries rather than cut the office rent and catered lunch/snack expenses
* They have no plan should someone not sign. I would think they would have planned that out, specially since they went on about how long it took them to make this decision.
* Layoffs were hidden until an announcement, which was also ambiguous where people thought it was still coming.
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My options are to sign and take a pay cut, or refuse to sign and see what happens. Law here says I am entitled to what effectively comes to a layoff, but I can't predict what the company will do.
The pay cut also makes my life a lot harder since we were already on a tight budget.
I would appreciate any thoughts, knowledge, or advice you might have.
I know you are not a lawyer and I am not expecting you to be, but lawyers can't speak to real world experience from others in the industry. I am currently finding a lawyer to assist.
If the answer is no, you need the job and most likely should take the pay cut.
Whatever your choice will be, it's time to start looking for a new job. The behavior you describe in your employer sounds to me like they don't put value in employees.
Well even that aside, when your employer has known money issues, especially to the extent that they're struggling to pay staff, ... Hopefully OP won't need it, but I wouldn't wait for the company to go belly up to start looking personally.
What would be your alternative. I'm guessing they are taking measures to not lay off more than 10% of people. Is there a win/win scenario here?
I'm more curious than anything to be honest.
I'm not claiming to have a good alternative for a company in trouble, I'm just saying if my employer is the company showing signs of trouble like that I'm going to start looking around.
Real-estate is surprisingly hard to get rid of. Depending on the size they might be stuck with a multi-year lease. Cutting snacks and lunch doesn't substantially change the equation.
That said, I'd start looking for another job. Layoffs AND a paycut for those that remain doesn't fit well. Might as well layoff more people and keep the others "happy".
It's hard to Guage overall morale since we're split into segregated teams per project so there isn't much intersection outside of the dead Slack server.
Nope, this would be a really bad approach. Let's leave aside the issue of _getting_ debt - banks are likely to be reluctant to offer debt to a business that is strugelling.
Taking on debt though to pay for staff you can't afford from revenue is only useful if the issue is cash-flow related. If the issue is income related then taking in debt is bad for the business, and bad for employers.
If the salary bill is too high then it has to come down. One way is to shed jobs. Those affected are affected 100%. Those unaffected are unaffected 100%.
The other way is salary cuts. Everyone is affected 90%. Which is better depends on which side you are on.
Some employees want to stay enough that they'll take 90%. Others will jump ship. If you have a job to go to, and you want to go, then go. That will free up 100% of your salary for the others.
Of course they know what happens if you don't sign. They're not morons. I'm surprised you even asked. The scenarios are obvious;
A) business goes under. All employees get nothing. Or B) another round of layoffs. (but this means severances, so may not even be possible) or C) enough people sign to lower the salary bill enough, but not you - you get to keep 100%. (this may not be ideal for your future raises etc) D) you quit.
I don't know your company, or your bosses, so I can't speak to their motives. But the fact they are asking for this suggests that the margin between success and failure is narrow. Like 10% narrow. They are offering you the opportunity to share pain, rather than cut more jobs.
At this point the ball is in your collective court. Feel free to leave. You might just be doing everyone a favor.
Think of it from the employer's perspective, if they're coming to the team with this proposal, it's likely they see a difficult financial Outlook. (Either that, or the management feels it's time for a culture reset)
I can only speak for myself, but I don't think many people enjoy the prospect of having to do a layoff. But sometimes it comes down to that or winding down the company, to me, in such cases, the choice is obvious.
pay reductions, are of course suboptimal, but they remove the need to spend a whole lot of time and money recruiting to rebuild a team once things turn around, so it's a sensible play from the employer perspective.
If it were me, I'd consider if I was motivated enough by the work independent of financial compensation to want to stay part of the organization, if so I'd consider taking the pay decrease but I would definitely push to for some future recognition that I took the risk for the good of the team. Ideally in writing.
It's likely, even probable, that the landlord has already been squeezed for rental drops - certainly most folks did that during covid. To drop the office means waiting until the next lease expiry - leases are typically 5 years long, so figure a year or two away at least.
A good benchmark would be to ask yourself what the return would be if you invested 10% of your salary in unit trusts over the same time period.
This is not a good deal and I would be hesitant to entrust my career to a management team who feel it is okay to ask this of their employees.
There are a number of ways this could have been structured, including:
1. An agreement to pay back the 10% plus interest @ prime within a specified time-frame.
2. Issuing of a comparable amount of shares in the company in exchange for the 10%. Dividend-bearing if a private company, trade-able on the JSE if public.
I have some options in terms of contacts. Perhaps it's a good idea to reach out.
The 2nd case was obviously a better deal, the only risk to me was that the fundraising would fail completely. If they're not offering you any kind of upside, you need to push back.
Are you in a position where, if you leave or are let go, the company would be hurt? (And the management is competent to know it?) Then hold your ground. Point out what will very quickly happen if you were to leave or be fired.
Otherwise, just ignore the request as long as possible and change jobs. If it's customary to give notice before you leave, make it abundantly clear that you're only staying through your notice period at full pay.
(Also, FWIW: In the US and many other places in the world, a lot of high-tech companies are run by people who have no clue how to run a company. Some people come from money and are just trying to follow in their parents' footsteps. Other people are just gambling and keeping up appearances. If you work for someone like that, now is the time to change jobs.)
Those that could work from home did. Some worked 100%,some 50%.
Over the first 6 months we assessed monthly, and slowly raised the floor. Once everyone was back on 100% we paid back-pay for all the missing pay (even those who chose to only work 50%).
Ultimately everyone was made whole, actually considering the saving in fuel from commuting came out way ahead. We managed to avoid any layoffs.
Not surprisingly (to us) we got very few thanks. Mostly we're told how bad we are running the company. Bonuses are too low etc. A long career being an employer has shown me that (with rare exceptions) the more we look out for staff the less they appreciate it.
Given that the country shut down with 3 days notice, everyone was in the same boat. Banks offered the usual payment holidays and so on.
Certainly a lot of companies did as you suggest, and simply let everyone go. I'm not sure that's better than 50%. Clearly all our employees were welcome to quit, and since none of them did, I guess they preferred 50% to 0%.
I'll be sure to mention to them next time that they're welcome to take 0% instead.
Loans were not an option given that the banks were closed. (And given that our appetite for large loans is zero.)
>> They should get a bonus.. you did.
Did I? news to me :) I was on 50% like everyone else, and I was made whole last. As it happens we issued 2 bonus' the following year. So yeah we share profits.
Obviously there were different approaches to dealing with unprecedented events. I'm not looking for employer of the year, but on the other hand I don't like firing people unnecessarily.
I've also seen benefit cut like getting rid of 401k contributions
I'd respond positively and explain that you understand the situation and would like to help. See if they can offer fewer hours, more vacation time, equity, debt, promotion... literally anything in exchange for this reduction.
Everything has a price, and nothing is for free.
Then when the company lays you off, your severance package is even less due to the same reasons as above.
The whole thing is going to have cascading effect, and since you can't predict when you'll be laid off given how cavalier they've been doing it so far, better not to sign it. Seems like the company is trying to cut costs before laying off again to save even more money.
And even if you are laid off because you didn't sign, at least you'll have the satisfaction that you didn't bend over backwards for their crap. Staying true to yourself is what you'll regret the least in the long run.
Depending on the market and your personal circumstances, you just need to put ~3 outcomes on paper and decide what's best for your family and you: you agree to a paycut, you don't agree and don't get fired, or you don't agree and you get let go.
Have a look at this link for some more answers: https://deale.co.za/unpaid-salaries-labour-law-in-a-nutshell...
Overall I'd go with 10% isn't a huge problem and to just agree to it, but keep your eyes open. I know of other companies during Covid that did 50%, or reduced working hours etc.
I didn't get a choice though I didn't sign anything either. It just happened. So now I just show up and do my job. Nothing more, nothing less, no overtime, I don't volunteer for any additional projects. Very cut and dry. After 10 years of working for the same company and that's the thanks I get, I appreciate the fact that I'm still employed. And that is all I need to be.
You may be stuck or just don't sign.
My next question would be "what are the benefits of taking a pay cut?"
It was actually pretty nice.
I think all we can do is ask questions and help you reason about this. Whatever decision you make, at least it will be informed and not rushed.
When we brought it up to management they were apologetic, and said they forgot. I work for a small company that wasn't particularly organized so it's possible they forgot but still. :(
TL;DR; If you take the pay cut, check in every few months with both management and others at your level.
If you don't, don't.
Then only you have the necessary information. Stop asking us and/or fishing for sympathy.
Instead, I get spam from a throwaway with an equally abusive comment history.