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Can your employer enforce a salary cut?
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Godelijn Boonman
Godelijn is partner of GMW Advocaten and is the head of the section employment law and the Legal Expat Desk. She is considered to be the undoubted employment law specialist for the expat/international community because of her extensive expertise and experience in international employment law matters and her international upbringing - she is aware of the ins and outs of the expat liefstyle from her own experience (Africa and England) and she is bilangual.

Godelijn is highly experienced in dealing with both non-contentious and contentious international employment law matters including (collective) redundancy packages and dismissal. She works for both companies and individual employees, enabling her to keep an open mind to both sides of a case.

Because of her expertise, Godelijn is often asked to be the key note speaker at international seminars. She has a keen interest in the international community and has been a member of the advisory board of the Women’s Business Initiative International since its beginning.
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Can your employer enforce a salary cut?

Paid partnership
Aug 6, 2013
Paid partnership

Salary is a "primary performance" of an employer that can be set against the "primary performance" of an employee to work. Furthermore, salary is essential in supporting oneself and an employee obviously has a substantial interest in his salary remaining unaltered.

A recent case

A short time ago, a judge was asked to agree with an employer’s proposal to cut his employees’ salary by 10 per cent. The employer stated that all employees had to agree to this decrease in their salary in order to prevent the company’s insolvency.

Most of the employees (69 per cent) had agreed to the proposal, as had the works counsel. One of the employees, however, undertook legal proceedings in order to maintain the full salary. The judge agreed with the employee.

The judge sympathised with the employer as regards the company’s difficult financial situation, but his ruling was that the proposal was not reasonable. The employee could not reasonably be asked to accept a salary cut of 10 per cent.

A unilateral changes clause

The conclusion is that even though a works counsel and two-thirds of the employees of this company were prepared to accept the 10 per cent salary decrease, the employer could not force all his employees to do so.

Such a salary cut is not a reasonable proposal, which means that the employer cannot expect an employee to agree to such a proposal. The judge even added that if the employer had had a unilateral changes clause, the outcome would have been the same.

What must an employee accept?

In general, employment conditions cannot be changed without first obtaining the consent of employees.

In cases where an employer does not have a clause in the employment contract stating that it can unilaterally change employment conditions, it will need to demonstrate a substantial business interest.

Even then an employer will still need to prove that, on the grounds of reasonableness and fairness, employees cannot be expected to agree with modifications of their employment contract.

Tip

Even if your employer’s financial position isn’t sound, do not conclude too easily that your employer can ask you to accept less salary.

Not only does your employer need to have a substantial business interest in doing so, the proposal must also be reasonable.

A salary cut is not usually found reasonable, whereas a change in a car lease agreement, for example, may be decided differently.
 

Godelijn Boonman is Attorney-at-Law at GMW Advocaten / Legal Expat Desk. For more information, please comment below.
By Godelijn Boonman