Changing Employee Pay Structure

[Freelancer87]

Hello,

Are there any laws or regulations that stipulate when we can change an employee's pay structure?

For example....moving an employee's pay plan from full salary of £20k and use a £15k + performance bonuses (this is a sales role).

We want to be fair on this.

Thanks,

Dave

 

[Blood Lust]

Hello,

Are there any laws or regulations that stipulate when we can change an employee's pay structure?

For example....moving an employee's pay plan from full salary of £20k and use a £15k + performance bonuses (this is a sales role).

We want to be fair on this.

Thanks,

Dave

You cant vary the contact of employment for your staff without theiir consent. However you can terminate a contract of employment but you must abide by the law when doing so. Once terminated you may have problems getting a person to come back under a new agreement.

What is the situation at your business?
Are times hard?
Do you have problems motivating staff?

If your staff are demotivated you need to uncover why. If you try to force them to be motivated by tweaking their wages it wont work. The reason is the underlying problem is still there.

If times are hard be honest with your staff. Say wage cuts or you have to let people go.

It depends on what the situation is

 

[gordano]

If your business is struggling financially then I would suggest a meeting with employees to explain the situation and that in order to maintain employment you need to revised employment pay contracts. You may find this approach will work, but equally you may find one or two who refuse.

If you just want to change the pay rewards for one sales person then why not meet then and discuss your proposal. You may find that they would see the commission element acceptable, or you may come up with a different agreement that works for you both.

 

[Blood Lust]

If your business is struggling financially then I would suggest a meeting with employees to explain the situation and that in order to maintain employment you need to revised employment pay contracts. You may find this approach will work, but equally you may find one or two who refuse.

If you just want to change the pay rewards for one sales person then why not meet then and discuss your proposal. You may find that they would see the commission element acceptable, or you may come up with a different agreement that works for you both.

I'll also add if he offers the new agreement as self-employed the staff are likely to jump at it.

 

[Chris Ashdown]

Cannot normally be self employed if just working for one main employer

 

[Blood Lust]

Cannot normally be self employed if just working for one main employer

Of course you can I've done it before.

 

[Chris Ashdown]

Try checking out HMRC rules

 

[arcon5]

Of course you can I've done it before.

You mean you got away with it before.

 

[Employment Law Clinic]

Hello,

Are there any laws or regulations that stipulate when we can change an employee's pay structure?

For example....moving an employee's pay plan from full salary of £20k and use a £15k + performance bonuses (this is a sales role).

No statute law, but case law that covers the employment contract - like any other contract: you can't change terms like pay without agreement, or at least a provision in the current contract to change them. If it was done without agreement, it could be argued there was an unfair dismissal, the contract being terminated by you. There are circumstances that would allow you to change the contract without any provision, but that would involve things like the company needing to do this to stay afloat.

The easiest option (and an approach probably necessary anyway) is to talk to the employee, get their views & agreement to the amendments.

Of course you can I've done it before.

Got away with it perhaps, but that doesn't mean it was legal or valid.

[edit: above written at the same time as arcon was posting]

Try checking out HMRC rules

The legal tests applied do vary between HMRC & the employment tribunals, but Chris makes valid points in this thread, and using the HMRC online tool will give anyone a good indication of what either authority would conclude the relationship to be - and that would probably be employed in this case.



Karl Limpert

 

[Blood Lust]

You mean you got away with it before.

What do you mean?

I've had an employer offer it and I've accepted. I paid my taxes on it. Why arent they allowed to change you to it if you agree?

 

[arcon5]

What do you mean?

I've had an employer offer it and I've accepted. I paid my taxes on it. Why arent they allowed to change you to it if you agree?

Because according to HMRC whether you are employed or self employed "is not a choice".

http://www.hmrc.gov.uk/employment-status/index.htm

Claiming to be self employed when you are not will have implications on how much national insurance is paid to the HMRC as employers contributions will be avoided. This could be seen as tax avoidance.

For example:

self employed earning £15K
total deductions including class 4 NI £2200

employed earning £15k
deductions £2200
employers NI contributions £1000
total to hmrc £3200

 

[Freelancer87]

What if you change their job role? How does that effect things?

Thanks!

 

[Talay]

HMRC's online tool highlights a number of issues which render a whole raft of supposedly self employed roles as really being employed.

Some basics are the right to provide a substitute, your own tools or theirs, one place of work, hours dictated by employer, etc.

There is many a can of worms waiting to be sprung open if you or HMRC wish to do so.

 

[yourownHR_Pamela]

A wage cut is a massive change to terms and conditions and has to be done correctly as you say. Consultation time in line with the legislation, trying to get an agreement , then imposing with the correct imposition time depending on your contracts of employment detail and legal requirements. It can be done but very slowly and tentatively. First step would be to meet all affected, explain situation, explain proposals, ask for their proposals.. then get into the nitty gritty of timings and letters etc. Happy to assist you can contact me if required.

 

[yourownHR_Pamela]

Changing their job role same response really - can be done, shoudl be done in consulatation, you just need to be very careful that you are not doing something that is going to result in claims for constructive dismissal, for example, changing their jobs complelety without consulation or agreement, so that they dont' match their skills, then the resign and say you breached their contract by not giving adequate notice or consultation of a change. So long as you have time you can do these things. My gut reaction is don't rush into it. I've dealt with projects before were managed to get huge changes in with agreement, but its good to be careful and tentative like I said., As before, happy to guide further if you want to get in touch

 

[Freelancer87]

Forgive my ignorance here....

Can you define 'consultation' as it relates to this?

Many thanks

 

[yourownHR_Pamela]

In this context I mean
meeting with the employees and informing them of the circumtances affecting their terms and conditions of employment and what changes you are proposing. Being transparent, and consulting them of their views as well as on the forthcoming possible changes. This is a legal requirement and failing to do so could lead to claims as contracts/conditions would have been changed without proper consultation with them. Also recommend following any meetings up with an information letter. Meetings can be individual or group. Ask for their ideas, show that you are activley consulting with them for solutions to the wage bill problem. The time scales will depend on your size. Here is a generic overview but please get in touch if you need more direct support with this.

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1074003264