Labour Affairs Q&A: Reducing salaries in tough times

Staff redundancies often occur during downturns in business. Removal or reduction of annual bonuses is understandable under these circumstances and wage freezes, or small increases only, are to be expected.

Wage reduction cannot be forced upon employees, because any change in employment conditions making them less beneficial to employees is a breach of contract. It is possible only if affected employees consent to the change in writing. And they will only consent to the change if they see benefits in it.

What are the paybacks for staff who agree to wage cuts?

The obvious benefit is their job security. It means those who agree to wage cuts will be kept until last. Those who insist on regular wage payments may soon see no payments at all.

That sounds like a discriminatory practice. Is it lawfully possible?

It is discrimination, but it is lawful to reward only those who contribute to the survival of the whole. If there are not enough jobs and money to go around, those who insist upon their individual rights at the risk of the group's survival will be targeted for redundancy. There is no need for a tough talk or threats.

Apart from those who agree to salary reductions during bad times, job security should also be offered to staff who agree to take both paid leave and unpaid leave; those who have been with the company longer than others; those who agree to take multi-task assignments; and those who have family responsibilities, especially single parents.

Of course, when termination is notified, the reason should be redundancy, and not refusing to accept lower pay.

Supachai Manusphaibool is managing director of MR&TS, a cross-cultural management consultancy. Send your questions to mrts@truemail.co.th.