Can your employer enforce a salary cut?

10 Jun 2013 | GMW Lawyers

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by Godelijn Boonman

 

 

 

The good news, as a matter of fact, is an employer cannot easily enforce such a measure.

This is mainly because the general rule is as follows:

Salary is a so-called primary performance  of an employer, which can be set against the primary  performance of an employee to work. Furthermore, salary is essential to be able to support oneself. In  other words, it is obvious that an employee has a substantial interest in the unaltered maintenance of  his/her salary.

 

A short while ago, a judge was asked to agree with a proposal from an employer to cut an employee’s  salary by 10%. The employer stated that all employees had to agree to a salary decrease of 10%, in order  to prevent the company’s insolvency. Some 69% of the employees had agreed to the proposal, as had the works counsel. One of the employees, however, decided to request full payment in legal proceedings. The judge agreed with the employee.


The judge could follow the employer’s argument as far as the poor financial situation of the company was concerned. However, in the opinion of the judge the proposal was not reasonable. The employee could not reasonably be asked to accept a salary cut of 10%.

 

A unilateral changes clause

One can conclude that, even though a works counsel, along with twothirds of this employee’s colleagues were prepared to accept the salary decrease of 10%, the employer can still not force this employee to do so as  well. Such a salary cut is not a reasonable proposal and that means that the employer should not expect an employee to agree to such a proposal. The judge even added that if the employer had a unilateral changes clause in the contract, the outcome still would have been the same.


What must an employee accept?

In general, one can state that employment conditions cannot be changed without first obtaining the employee’s consent. When an employer does not have a clause in the employment contract stating that it can unilaterally change the employment conditions, it will need a substantial business interest. But even then, an employer will still need to prove that, on grounds of reasonableness and fairness, it cannot be expected that the employee will agree with modification of his/her employment contract.


Tip:

Even if your employer’s financial position is not sound, do not conclude too easily that an employer can ask you to accept less salary. Not only does the employer need a substantial business interest, but the  proposal must be reasonable. A salary cut is usually not found reasonable, whereas, for example, a  change in a car lease agreement may be decided differently.


GMW Advocaten

led@gmw.nl
T: 070 361 5048
www.legalexpatdesk.nl

www.gmw.nl/en

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