Emma Williams outlines what employers need to know when considering reducing their employees’ salaries
Before former chancellor Kwasi Kwarteng was sacked by prime minister Liz Truss, MPs had reportedly filed a censure motion to halve the pay of both the chancellor and Truss. As MPs, Truss and Kwarteng receive a salary from the Independent Parliamentary Standards Authority, which is currently 84,144. On top of that, Truss and Kwarteng are also entitled to receive a ministerial salary of 79,936 and 71,673, respectively. It is those ministerial salaries that the motion proposes should be halved. If passed, the impact of a censure motion is almost entirely political, as it does not have a binding effect, so the censured ministers could choose not to take a lower salary, although it remains to be seen whether that would pass muster in the court of public opinion.
As Truss and Kwarteng are officers of the House of Commons and not employees, this pay cut has been proposed in a very specific context. Pay cuts are, however, something that businesses and their employees have become more familiar with over the past few years.
To mitigate the effects of numerous lockdowns and benefit from the
coronavirus job retention scheme, many organisations looked to reduce their employees’ rate of pay either temporarily or permanently during the pandemic. Proposing a pay cut for poor performance, in a private company context, is, however, legally even trickier to manage.
Employers cannot...
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