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Message from employer: pay cut
Old 01-21-2013, 08:11 PM   #1
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Message from employer: pay cut

If your employer cuts your pay by 20%, but then lets you increase your hours by 20%, so you have the same take-home pay, what kind of message is your employer giving you?

I know someone this has happened to. I think the employer is trying to get them to quit. I can see the managers sitting in a meeting: "Well, let's cut the pay, but ask them to work 20% more hours for the same total pay. Do you think they will go for that?" "Let's try it and see what happens."

Am I reading this incorrectly? What do you think?
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Old 01-21-2013, 08:14 PM   #2
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I think my response would be "see ya!"
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Old 01-21-2013, 08:17 PM   #3
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I think that fulfils the criteria for "constructive dismissal". It's a material change made unilaterally. OTOH if the employee's consent is obtained, that's different.
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Old 01-21-2013, 08:21 PM   #4
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Originally Posted by LOL! View Post
If your employer cuts your pay by 20%, but then lets you increase your hours by 20%, so you have the same take-home pay, what kind of message is your employer giving you?
That they're bad at math?
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Old 01-21-2013, 08:24 PM   #5
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I think that fulfils the criteria for "constructive dismissal". It's a material change made unilaterally. OTOH if the employee's consent is obtained, that's different.
In my jurisdiction this would certainly qualify as "constructive termination" so it would qualify you for an ungodly amount of unemployment comp. In fact the threshold is 15% pay cut in my jurisdiction per statute. I'm not sure how many folks actually quit and then file for unemployment due to constructive termination - seems like the administrative officers would nitpick your application (if they were zealously doing their job - unlikely in my jurisdiction).
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Old 01-21-2013, 08:24 PM   #6
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That they're bad at math?
Or they think you are.
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Old 01-21-2013, 08:26 PM   #7
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Here is what jon is talking about.....

$10 hr X 40 hrs = 400

20% cut cuts to $8. 20% increase in hours = 8 more

$8 X 48 =384
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Old 01-21-2013, 08:31 PM   #8
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I currently have a deal where I work 5 days one week and 4 the next. They have taken this away from certain classes of employees. If they try to move me into one of these classes or just unilaterally yank it, they will be finding themselves desperately searching for my replacement in short order. If I were the OP's friend, I would be scooting out the door.
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Old 01-21-2013, 08:31 PM   #9
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Originally Posted by jon-nyc View Post
That they're bad at math?
Well played!

Or maybe they think the employee is bad at math?

I missed it the first time 'round, but it's just like the stock that goes down 20%, and then goes up 20%. It's still down.

But more to the point, does the employee have better options? If not, he/she better suck it up, unless they are FI and ready for RE.

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Old 01-21-2013, 08:36 PM   #10
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They are FI, but state "I am not a quitter."

I have said, "Why don't you quit? They may pay you more to get you back."
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Old 01-21-2013, 08:46 PM   #11
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A classic example of "Doing more with less"

More hours at a lower rate of pay.

How arrogant!
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Old 01-21-2013, 09:18 PM   #12
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Hmmm so does the quality of work matter? I might show up and surf the internet all day and call all my friends to catch up. So they might get the hours, but my time would not be productive. I guess I'll be unemployed in a few days....
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Old 01-22-2013, 05:19 AM   #13
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In fact the threshold is 15% pay cut in my jurisdiction per statute.
Interesting; that makes a lot of what's happened in our company in the past come into better focus. We had a 10% across-the-board pay-cut combined with a years-long hiring freeze, resulting (as staffers left) in a decrease in headcount to do the same job, overburdening the rest of us to cover the gaps. I suspect that that 10% would have been higher if the law allowed, eh?

It is also interesting that workload doesn't factor into the legal equation.

We've since been (mostly) acquired, and so the pay-cut has been reversed, and we've since received one 3% COL increase a couple of years back, the first in over ten years. So even with the reversal of the pay-cut and the 3% increase, we're all earning about 16% less than ten years ago when adjusted for inflation.

What's the message we received? "We have directed us all down a dead-end, which has made the skills and special knowledge you've gained over the last ten years worthless to anyone outside these four walls, and so we know we have you by the balls because no one else will hire you at anything close to a reasonable salary anymore."

They're trying (this week, incidentally) to change the rules for the sale staff, trying to hold them to account now against today's higher standards for performance, tripling quotas (from what I've heard) and requiring account managers to adhere to a brand new set of engagement standards. We'll see how that goes. It's actually Phase II of their efforts to recover from the damage they did over the last ten years to the sales group. What I found interesting is that both times they announced the big changes they're imposing, our top sales person left the company precipitously.

They haven't gotten to operations staff yet. They're so far entrenched in this dead-end they led us all down that I'm really not sure what they could do. If I was Montgomery Burns from the Simpsons, I would just ditch the whole product line. But they cannot do that. They've got hundreds of customers who have built their business around what we offer them, and we were acquired by a company with a long-standing, public commitment to never leave a customer high-and-dry. So I translate that into some measure of safety for the operations staff, though you can be sure that once they get around to it they're going to find a way to replace what we do with something better, and move existing customers to that new thing. Of course, to get there, they're going to need us, since we're the only experts on what's out there now.

As I mentioned in the recent "coasting" thread, I've, perhaps foolishly, interpolated that into some measure of comfort that I'll be able to do a good job for customers for perhaps as many as another six years before they truly don't need me anymore. Not all the way to retirement, but more than half-way there. So I will have a decision to make: Do I take brewer12345's approach, and take my chances that someone out there will pick me up despite my skills being so badly out-of-date/arcane now? Or do I try to find a way to have this company agree to carry me along another five or six years after their new offering (whatever that may end up being) is available - obviously in some other capacity?

Anyway, this is a rather long-winded way of saying that I don't think you can look at situations like this in the way we did twenty years ago: It isn't necessarily a mistake, or foolishness on the part of the company. It's opportunistic. It's mildly exploitative, but might be a reasonable gamble. Sometimes, there simply isn't enough money to do the right thing, and no requirement that employers go out of business when their financial situation is dire. Let's not forget that taking a job is making an investment, for many employees. Not everyone is sanguine about jumping from job to job. Not everyone enjoys having to sell themselves every few years, and really, continually every day. Sometimes the best approach really is to grin and bear it, fully cognizant that you've made unfortunate choices and have to live with the consequences if you aren't willing to climb up onto the surfboard.
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Old 01-22-2013, 07:52 AM   #14
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Originally Posted by AWeinel View Post
Here is what jon is talking about.....

$10 hr X 40 hrs = 400

20% cut cuts to $8. 20% increase in hours = 8 more

$8 X 48 =384
Or, more generically (and algebraically):

1.0 + 0.20 = 1.20

1.0 - 0.20 = 0.80

1.20 x 0.80 = 0.96, or 96% (which in AWeinel's example, is 400 x 0.96, or $384).

To make the math work and come out even, one would have to divide the starting amount by the percentage change as well as multiply by it.

1.0 / (1.0 - .20), or 1.0 / 0.80 which is 1.25, or +25% (increase in hours)

1.0 - 0.20 = 0.80, or -20% (decrease in pay)

1.25 x 0.80 = 1.0, or breaking even.
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Old 01-22-2013, 08:08 AM   #15
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Was this done to just one employee or across the board to many employees ?
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Old 01-22-2013, 08:42 AM   #16
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I think the executives proposing this should lead by example, and be the first ones to adopt this new pay/work hour arrangement
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Old 01-22-2013, 08:59 AM   #17
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Was this done to just one employee or across the board to many employees ?
+1, an important distinction. If it's one person the leading answer would almost have to be 'trying to get them to quit' or at least they're considered 'expendable.' Hard to believe there wasn't more explanation, I know it happens, but most employers aren't dumb enough to just jerk employees around to see what they can get away with (flame away). No matter what, unduly hostile act by an employer.

If it's many/most employees, they're trying to add labor without adding the associated benefits, something that most employers have been trying to do one way or another for decades. You'd also have to ask what market rates are for that job/industry, another factor. Unfortunately it's a double-edged sword, if you lose people it will be the better performers, and the employer is left with average or LCD employees.
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Old 01-22-2013, 09:03 AM   #18
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True. In my story, it was across-the-board. I would definitely look at it differently if it was just me.
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Old 01-22-2013, 09:56 AM   #19
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I believe it was just this one person, but I am not sure.

Thanks for all the thoughts.
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Old 01-22-2013, 10:03 AM   #20
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/snip/
They're trying (this week, incidentally) to change the rules for the sale staff, trying to hold them to account now against today's higher standards for performance, tripling quotas (from what I've heard) and requiring account managers to adhere to a brand new set of engagement standards. We'll see how that goes. It's actually Phase II of their efforts to recover from the damage they did over the last ten years to the sales group. What I found interesting is that both times they announced the big changes they're imposing, our top sales person left the company precipitously.

Just curious.... why would the top sales people leave IOW, if they are good, then they should be making quota easily even if it were raised...

Now, if they also dropped their salary because of the higher quota, that is a different story....
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