Cutting salaries could lead to ‘protective awards’, lawyer warns

Companies which try to reduce staff wages without the consent of staff could leave themselves open to redundancy law payouts.

That is according to Simon Horsfield, employment lawyer at Pinsent Masons, whose comments come in the wake of Hewlett Packard’s decision to cut the salary of its workforce.

Mr Masons explained that in the UK, employers need the consent of their staff before they make reductions to their salary.

He said: “The argument that companies are making is that this is an alternative to redundancies. You need to present this as a part of package to deal with financial circumstances.”

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Businesses that fail to tell their employees about proposed cuts “can expose themselves to protective awards of up to 90 days’ pay per employee”, he said.

He recommended that employers put a time frame on any plans to reduce salaries and give employees a date by which they will return to full pay.