Being asked to reduce your pay or your hours of work

Information

When your employer has a downturn in business or there is less work for you to do, your employer may ask you to take a pay cut or to work fewer hours. If your employer tells you that he or she is unable to continue employing you on your current terms and conditions of employment you need to consider your employer’s request very carefully. You should ask your employer for details of the reduced business activity, who else has been asked to reduce their hours of work and what were the criteria for selection.

Reduction of working hours or pay

If your employer asks you to work fewer hours or take a pay cut, this is a change in the terms and conditions of your contract of employment. Any change to your contract of employment must be agreed by both you and your employer. When deciding whether or not to agree to working reduced hours or take a pay reduction, there are a number of issues to be considered:

  • Reduced pay – what are the implications of this – for example, money and tax and paying the rent or mortgage
  • Scheduling of working hours – it may suit you and your family to reduce your hours, for example working a day less per week or 2 hours less each day.
  • Downturn in business – what choice do you have. If you don’t accept reduced working hours or pay your employer may decide to make you redundant.

You should ask your employer to give you written details of this proposed change to your contract of employment including a review date. You should respond to this in writing and if you are proposing to accept the change, you should stress that your acceptance is temporary. At the review date the change to your contract can be reconsidered and you could ask to return to the original terms and conditions of your contract.

Minimum wage: In some cases an employment contract or terms of employment will say that an employee is paid at the "prevailing National Minimum Wage hourly rate". Where this is the case, an employer may reduce the employee's pay in line with the minimum wage rates. In other cases there may be a provision in the contract that provides for a reduction in pay. Where this is not the case, your employer cannot reduce it without your agreement, as this would change the terms of your contract of employment. Again, you may agree to reduced wages, if, for example, the alternative may be reduced hours or redundancy in the current economic situation.

If you do not agree to reduced working hours or pay

If your employer proposes to reduce your working hours or pay, this is a change to your terms and conditions of employment. You may agree to the reduction for reasons as described above.

If you do not agree to this reduction there are a number of options available to you:

  • You may make a complaint to a Rights Commissioner under the Industrial Relations Acts 1969-2001. Under this legislation if your employer objects to a Rights Commissioner hearing you would have to refer the matter to the Labour Court.
  • If you consider that a reduction of your pay is an unlawful deduction from your wages you may make a complaint to a Rights Commissioner under the Payment of Wages Act 1991.
  • If you say you wish to continue working as before your employer may decide to make you redundant. If you are dismissed in this way, you may qualify to bring a claim for unfair dismissal. Unless your employer can prove there was a genuine redundancy situation and that fair procedures were followed, this dismissal may be found to be unfair.
  • If your employer insists on reducing your working hours or pay you may also consider that you have no choice but to resign and claim constructive dismissal because your employer has breached the terms of your contract. Before you do this, you should always seek detailed legal advice as proving constructive dismissal can often be difficult.
  • If you think that a reduction in your pay or your working hours is a breach of your employment contract you could seek redress through the civil courts.

Lay off or short-time working

Alternatively your employer may lay you off or put you on short time for a number of weeks. A lay-off situation arises where your employer is temporarily unable to provide work for you. A short-time situation arises where, due to a reduction in the amount of work to be done, your pay or hours are less than half the normal weekly amount. In both cases these must be temporary situations and your employer must notify you before they start. The best way to do this is by using Part A of form RP9 (pdf). Your employer can lay you off or put you on short time if it is in your contract of employment or it is custom and practice in your workplace. Otherwise your employer should not lay you off or put you on short time without your agreement. However if you do not agree you may be made redundant.

Claiming redundancy: If a lay-off or a short-time situation has continued for 4 weeks or more, or for 6 weeks in the last 13 weeks, you may claim a redundancy lump sum. If you claim redundancy in this way you are considered to have left your job voluntarily and therefore you will lose any right to notice or pay in lieu of notice from your employer. However if you have been laid off and you are subsequently made redundant by your employer you do not lose your notice entitlements.

Duration of lay off or short time: If you do not wish to claim redundancy but the lay-off or short-time situation continues, the question arises as to whether it is a temporary situation. If it becomes apparent that it is no longer temporary then the situation is now a redundancy rather than a lay-off or short-time working. It is the employer who initially decides whether or not there is a redundancy situation. If there is a dispute about this it should be referred to the Employment Appeals Tribunal to make a decision.

Social welfare payments

If your hours of work are reduced so that you are unemployed for at least 4 out of 7 consecutive days you may be entitled to a social welfare jobseeker’s payment.

To qualify for Jobseeker’s Benefit you must have enough PRSI contributions and must have suffered a substantial loss of employment in any period of 7 consecutive days. This means, you must have lost at least one day's employment and as a result of this loss be unemployed for at least 4 days out of 7 days. Your earnings must also have been reduced because of the loss of employment.

If your employer reduces your days at work to 3 days a week or less and you do not qualify for Jobseeker’s Benefit you may get Jobseeker's Allowance for the other days. You must meet the other conditions that apply to Jobseeker's Allowance, for example, you must satisfy a means test.

It may be possible to get Family Income Supplement if you have a family and your pay or hours are reduced.

Redundancy and alternative work

Instead of reducing your working hours your employer may make you redundant and offer you alternative work under a new contract of employment. However this may affect your entitlement to a redundancy payment.

If your employer makes you a reasonable offer of alternative work, and you refuse it, you may lose your entitlement to a redundancy payment. Generally speaking, alternatives which involve a loss of status or worsening of the terms and conditions of your employment would not be considered reasonable.

You may take up an alternative on a trial basis for up to 4 weeks. Where the alternative involves a reduction of 50% or more in hours or pay, working under the new arrangements for up to 52 weeks will not count as an acceptance.

If you accept an offer in writing from your employer for a new and different contract which will take effect within 4 weeks of the ending of the previous contract, you will not be entitled to claim redundancy. Equally, if you refuse such an offer unreasonably, you will lose your right to a redundancy payment.

Redundancy payment

If you were made redundant within one year of being put on reduced hours or pay, your redundancy payment would be based on your earnings for a full week. If you are made redundant after working reduced hours for more than a year, how your payment will be calculated depends on whether you accepted being on reduced hours or not. If you fully accepted the reduced working hours as your normal week and never asked to return to full-time work, then your redundancy payment will be based on your gross pay for the reduced working hours. If, on the other hand, you never accepted the reduced working hours as your normal hours and continually asked to be put back on full-time working, your payment would be based on your normal weekly earnings. If you have a dispute about this with your employer you could make a claim to the Employment Appeals Tribunal.

How to apply

If your employer proposes to reduce your working hours you can contact Workplace Relations Customer Services for information about your employment rights. You can contact your local Citizens Information Centre for information about your rights and entitlements.

Where to apply

Workplace Relations Customer Services
(formerly Information Services of the National Employment Rights Authority)
Department of Jobs, Enterprise and Innovation
O'Brien Road
Carlow
IRELAND
Opening Hours: Mon. to Fri. 9.30am to 5pm
Tel: (059) 917 8990
Locall: 1890 80 80 90
Homepage: http://www.employmentrights.ie

Last Updated: 22/4/2013

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Contact Us

If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.

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