Handling a Pay Cut
Posted in Salaries & Benefits
Times are tough nowadays. Many companies are struggling to fight against recession and it is very much evident in your office. Despite the challenging economy, your boss decides to keep you; however, you will have to work with a reduced salary. The thought of handling your finances with lesser money brought you the shivers, but you think this is better than losing your job altogether.
Should you accept the pay cut right away? Is there a way to circumvent this situation? Here are some helpful tips.
Do not accept a pay cut immediately
Avoid conveying any type of agreement about pay cuts, either verbally or in writing. Tell your superior that you need more time to think about this option and discuss it with your family. While buying yourself some time, find out all the facts regarding your salary reduction before finally accepting it.
Reducing your pay not only can affect your income, but also your future severance package and compensation for unused sick or vacation days. A lower salary can also hold against you in salary negotiations with future employees, as they may assume you are willing to accept a lower salary than what they actually provide.
Know the facts
Ask your superiors about the issues surrounding your salary reduction. Inquire about whether this pay cut is mandatory or voluntary, as well as how much of your salary is reduced. You may also want to check who else is affected by the pay cut, how long it will last, and whether there will be a retroactive reimbursement once the company becomes financially sound.
Also ask about the consequences once you accept the pay cut, such as how it will affect raises, bonuses, and benefits; as well as whether your work hours become shorter or longer.
Weigh in the situation
Check the pros and cons of accepting the pay cut. Ask yourself how much you really need this job. Also, you need to determine whether your company will recover from this setback. You may also want to consider this situation as an opportunity to move on to a better job.
Negotiate
See if you can talk your way into making the pay cut more palatable and tolerable to you and your family. Try suggesting shortening your work hours or reducing your work week into four days. You may also want to suggest working from home, then telecommunicate with your bosses through e-mails and live chats, which will hopefully reduce your commuting costs.
If you still believe your company is viable and valuable, ask for stock options. Finally, ask your superiors for a written agreement about the salary cut, when your pay rate might be restored, and whether there will be any recompense for lost wages.
