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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50487
Experience:  Qualified Employment Solicitor
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Hi there. My sister has worked for her company for 15 years.

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Hi there. My sister has worked for her company for 15 years. On 2 occasions over those years, she has had her pay reduced (to which she agreed) and then increased again. She has been told by her boss that he wants to give her a 47% pay cut, because the company is in financial trouble. She cannot afford to live on this amount. If she refuses and her boss decides to dismiss her, am I right to assume that this would be a redundancy situation (and she would be entitled to redundancy pay)? Please note that they have no written contract of employment - how does this affect things?
She is currently off sick (has been for 2 weeks, but is likely to be for a couple of months). Her boss has told her she will only receive statutory sick pay. Does this affect any dismissal/redundancy too?
Ben Jones : Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Has her pay always returned tithe original amount when it was increased?
Customer: Yes i'm pretty sure it has. To be honest, I think he is trying to sell the company and actually wants her to go. She's run the company for him for the past 10 years and over the past 6 months he has stripped back most staff, doubled her targets, made her work from home etc. anyway, that's neither her not there.
Customer: She currently earns £45k and he wants to drop it to £24k. He hasn't put it in writing (he never does anything in writing - quite purposefully, I'm sure).
Customer: She is very, very I'll at the moment - she has a tumour on her adrenal gland and her blood pressure is extremely high as a result. The pressure at work has caused her anxiety attacks and is having an effect on her blood pressure, so the doctor has signed her off (2 weeks now) because of the danger of this.
Customer: She has no written contract, which is concerning me. I just want to check that, if she refuses the pay decrease, his only options are to keep her on at that salary or make her redundant. She has to decline the pay decrease because she cannot afford to love on that (she support a family of four on her own) and also because the likelihood is he will make her redundant anyway and it is a scheme to lower what she will get redundancy pay.
Ben Jones :

Hi, this situation will not automatically amount to redundancy because for that to happen the employer needs to have to reduce its employees doing a particular job. If there is no need to actually reduce the headcount then no redundancy will exist so she cannot claim to be facing a redundancy situation.

Instead this would need to be dealt with through the laws on changes to contracts. I know you said she does not have a written contract but there will still be an implied contract in place, the terms of which would be determined by what has been consistently applied over time and what has been agreed between them. So for example if she has always (apart from the temporary changes) been paid a set salary then it is likely that this would be an implied contractual term and changing it now would amount to a variation of her contract of employment.

There are a few ways in which an employer may try and make changes to an employee’s contract of employment. These are by:

  • Receiving the employee’s express consent to the changes.

  • Forcefully introducing the changes (called 'unilateral change of contract').

  • Giving the employee notice to terminate their current contract and then offer them immediate re-engagement under a new contract that contains the new terms.

If the changes are introduced without the employee's consent, then the following options are available:

1. Start working on the new terms but making it clear in writing that you are working ‘under protest’. This means that you do not agree with the changes but feel forced to do so. In the meantime you should try and resolve the issue either by informal discussions or by raising a formal grievance.

2. If the changes fundamentally impact the contract, for example changes to pay, duties, place of work, etc., you may wish to consider resigning and claiming constructive dismissal. The resignation must be done without unreasonable delay so as not to give the impression that the changes had been accepted. The claim must be submitted in an employment tribunal within 3 months of resigning and is subject to you having at least 2 years' continuous service. You would then seek compensation for loss of earnings resulting from the employer's actions.

3. If the employment is terminated and the employer offers re-engagement on the new terms that could potentially amount to unfair dismissal. However, the employer can try and justify the dismissal and the changes if they had a sound business reason for doing so. This could be pressing business needs requiring drastic changes for the company to survive. If no such reason exists, you can make a claim for unfair dismissal in an employment tribunal. The same time limit of 3 months to claim and the requirement to have 2 years' continuous would apply.

Hope this clarifies your position? If you could please let me know that would be great, thank you

Ben Jones :

Hello, I see you have accessed and read my answer to your query. Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this? I just need to know whether to close the question or not? Thanks

Customer: Can you just let me know if her only receiving SSPis classed as a change of implied contract, when she (and other
Customer: employees) have always received full pay when taking time off sick?
Customer: also, you mention that if her boss has reasons to reduce her salary (ie the company is in financial trouble) then she will not be made redundant - he can basically just drop her salary and she has to like it or leave without any redundancy pay. Even if it's by nearly 50%?
Ben Jones :

Hi, in terms of sick pay she would only be entitled to whatever is in her contract. For example if she is not entitled to full pay under her contract then she cannot expect that. However, this could change if she has always been paid full pay if she went off sick, in which case she could claim this has become an implied contractual change but it needs to be something which was applied consistently and it was clearly communicated to her and others that it was the case. In that event it could amount to a breach of implied terms and conditions.

A redundancy only occurs if the employer needs to reduce the number of employees, not if they just need to cut costs by reducing pay, so that is why such situations will not always amount to a redundancy, although as mentioned she can consider constructive dismissal instead.

Hope this answers your follow up query?


Yes, thanks Ben.

Ben Jones :

you are welcome, all the best

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