Should you ever ask for a pay cut?

I guess it depends on what you’re earning. If you’re earning around £3 million, which is what Richard Pennycook, the chief executive of the Co-op Group, has reportedly been making in total, it’s not so crazy. Recently Pennycook asked for a 60 per cent cut to his overall pay package – and his basic pay will be £750,000 instead of £1.25 million (with travel costs and grocery shopping, probably, still within budget).

But for those of you on more modest salaries, is there ever a time when you should contemplate asking for lower pay? Pennycook requested a pay cut on the basis that his job had become easier and less demanding. Are you being paid too much for what you do?

Pause and ask yourself whether you’re worth your salt. If you’re in a unique role and being paid above the market rate or if, say, others around you are doing the same or similar job and being paid a lot less, unless you’re something special, the good times may not last forever. As they say, nothing’s free in life.

You can expect your employer to try and squeeze more out of you for the extra cash and you’ve got to be prepared for those higher expectations. If you’re looking for an easier life at work the additional money may not be worth the stress. And when the business is looking to make cost savings, whose head will be on the block first? Being pushy for that whopping pay rise perhaps wasn’t such a smart move after all.

But is asking for a drop in pay sensible? It could be. Suggesting a pay cut when the business is in temporary financial difficulty may endear you to your boss. Again, suggesting a pay cut when you’re first on the list for redundancy could save your job. The problem is that your employer might not always view the request positively. If your salary is too high, it could just highlight your cost to the business, prompting calls to manage you out. It also may be perceived as a sign of weakness and not the stuff of rainmakers.

Whether or not you are earning more than you should, can your employer actually force you to take a pay cut? In lean times, for example, employers have been known to try and introduce salary reductions for the workforce, rather than make redundancies. Generally, employers cannot impose pay cuts on the workforce and have to get their consent.

If an employer imposes a salary cut without the employee’s agreement the employee may continue working but make it clear that they are working under protest. Alternatively, the employee might resign on the basis that the employer has fundamentally breached their contract of employment. Depending on the circumstances, various claims could be considered.

However, if an employer cannot get the employee’s agreement there is another option. Providing the employer can demonstrate a sound business reason for the lower salary, carries out consultation as required, warns that any continued refusal could result in the employment being terminated and offers re-engagement on the new terms, a subsequent dismissal could be fair.

So lots to think about if you’re overpriced. Just be aware.

Matt Gingell is a partner at Gannons Solicitors, and specialises in employment law. Read all of his articles at www.mattgingell.com