Being asked to take a cut in pay or hours

Introduction

When your employer has a downturn in business or there is less work, you may be asked to take a pay cut or to work fewer hours.

If your employer tells you that they are 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 or pay and what were the criteria for selection.

Your contract of employment

If your employer asks you to work fewer hours or take a pay cut, this is a change to 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 a cut in pay or hours, think about the following:

  • Can you afford to take a pay cut?
  • Would it suit you and your family to reduce your hours?
  • Do you have a choice? If there is a downturn in business and you don’t accept a cut to your pay or hours, your employer may make you redundant.

Ask your employer to give you written details of this proposed change to your contract of employment including a review date.

Respond to this in writing. If you agree to accept the change, stress that your acceptance is temporary.

At the review date the change to your contract can be reconsidered and you can ask to return to the original terms and conditions of your contract.

If you do not agree

If you do not agree to reduce your hours or take a pay cut, you have the following options:

  • If your employer makes you redundant for not accepting the cut in hours or pay, you may be able bring a claim for unfair dismissal. Unless your employer can prove there was a genuine redundancy situation and that fair procedures were followed, your dismissal may be found to be unfair.
  • If your employer insists on reducing your working hours or pay you may feel you have no choice but to resign. You can claim constructive dismissal because your employer has breached the terms of your contract. Before you do this, you should always get detailed legal advice as proving constructive dismissal can often be difficult.
  • If you think that the cut to your pay or hours is a breach of your employment contract you can take a case through the civil courts.

Lay off or short-time working

If there is a lack of work available or changes to the financial circumstances of the business, your employer may lay you off or reduce your working hours (put you on short-time) for a number of weeks.

A lay-off is when your employer tells you that they expect you to have no work for a temporary period and you will not be paid.

Short-time working is when your hours and pay are reduced due to a decrease in work.

In some cases when you have been in a lay off or short-time working situation for a certain length of time you may be entitled to claim redundancy.

Can I get a social welfare payment?

There are social welfare supports available, depending on your situation.

If your hours are cut you may be entitled to a social welfare jobseeker’s payment.

To qualify for Jobseeker’s Benefit you must:

  • Have enough PRSI contributions
  • Have lost at least one day's work and as a result of this loss be unemployed for at least 4 days out of 7 days
  • Have reduced earnings because of the loss of employment

If your employer reduces your days 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.

You may also qualify for a Working Family Payment if you have a family and your pay or hours are reduced.

If you are made redundant

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.

Redundancy payment

How your redundancy payment will be calculated depends on whether you are made redundant:

  • Within a year of being put on reduced hours or pay, or
  • After working reduced hours for more than a year

If you are made redundant within a year of being put on reduced hours or pay, your redundancy payment is 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 is calculated depends on whether you accepted being on reduced hours or not:

  • You fully accepted the reduced working hours and never asked to return to full-time work: your redundancy payment is based on your gross pay for the reduced working hours
  • You never accepted the reduced working hours as your normal hours and continually asked to be put back on full-time working: your payment is based on your normal weekly earnings

If you have a dispute about this with your employer, you can make a claim to the Workplace Relations Commission.

Alternative work

Before your employer makes you redundant, they might offer you another job in the business. This is known as ‘alternative work’.

The alternative work should be a reasonable offer. Alternatives which involve you losing status or getting worse terms and conditions would not be reasonable.

You may not be entitled to claim a redundancy payment if your employer offers you suitable alternative work which you refuse without good reason.

More information

Contact the Workplace Relations Commission's Information and Customer Service for information about your employment rights.

Contact your local Citizens Information Centre for information about your rights and entitlements.

Workplace Relations Commission - Information and Customer Service

O'Brien Road
Carlow
R93 E920

Opening Hours: Mon. to Fri. 9.30am to 1pm, 2pm to 5pm
Tel: (059) 917 8990
Locall: 0818 80 80 90
Page edited: 9 August 2022