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Corona - cutting working hours and pay


IDA's legal advisors give good recommendations on what to keep in mind if your employer wishes to cut your working hours and salary.

As a result of the Corona crisis, IDA is experiencing that some employers, facing financial challenges, want to decrease IDA-members' working hours and pay. Such changes, despite scope, are always to be regarded as significant changes in position and must, therefore, as a rule, give the employee a fair opportunity to consider. However, for liquidity reasons, the employer often wants changes to apply immediately, but it does require the consent of the employee concerned.

IDA focuses on constructive dialogue and helping to ensure that the collective agreements consider this specific situation companies and employees are facing.

Typically, our members are given very little time to accept or refuse the agreement, but since a decision to take a pay cut can have a major impact on anybody's living and family situation, the employer should give the employee a fair opportunity to consider and respond to the proposed change.

Reach an agreement or being made redundant

It is often a case of being faced with the election between coming to an agreement to working hours and pay cut or being made redundant. Unfortunately, it is rarely possible to negotiate the terms that management presents.

On the other hand, if you are made redundant after you reach an agreement, it might be a better option to come to an employment severance agreement and then find a new job.

It can be a costly affair without a proper agreement, and you should, therefore, contact IDA and your A-kasse (Unemployment Insurance Fund) before you accept one. Then you would be better off, that is, in a more desirable or advantageous position if the company wants to make you redundant or goes into bankruptcy.

What is a genuine dismissal?

Please note that if your employer dismisses you because you declined a working hour and pay cut, it may be unlawful because it violates part-time law unless your employer can prove that ending your employment is in no way justified by your rejection of working hours and pay cut. However, you should be aware that if your employer is bleeding cash, it is not difficult for the company to meet its burden and dismiss you.

Things you should be aware of

This is not a pleasant situation, but there are several things you should try to include in your agreement:

  • Agreements on cutting working hours and pay should always be temporary. It should be agreed that terms will return to normal if you are dismissed during this period.
  • The agreement should indicate the new weekly working hours, including daily length and location. It can be relevant in the event of illness. It does not make sense to accept working hours and pay cut and be on reduced time losing regulated rights such as paid overtime and time off in lieu.
  • The new salary, which is often reduced proportionately, must be included in the agreement. You should demand full pension payment even if the basic salary is reduced.
  • In principle, your salary during holidays should be proportional to the salary you receive at the time of the holiday. If working hours are reduced by 20 percent or less, it will have the consequence that the salary during the holiday is calculated on the basis of the reduced salary, which is a disadvantage for you if you are still on reduced time during the holiday period from 30th May to 30th September 2020.
  • It will be beneficial if you and your employer agree that the full salary is paid during holidays during the mini-holiday year, regardless of reduced time and salary at the time of your holidays. If working hours are reduced by more than 20 per cent, special rules apply under the Holiday Act, which you can get explained by contacting the IDA.
  • You should agree with your employer that holiday entitlement, in case of dismissal, is calculated according to your previous high salary, and not the newly reduced one. This is especially relevant if the company does not survive the economic crisis and therefore dismisses you.
  • If you have an employee bonus scheme, then you should consider the consequences that a reduction in working hours and pay would have on your bonus scheme. For example, if the achievement of a bonus goal is dependent on your performance and you go down in time, then the bonus goal should be adjusted accordingly.
  • Also, please note that in the event of bankruptcy, the Employees' Guarantee Fund will provide cover according to the regulated salary. Just like a supplemental unemployment scheme and severance allowance would be calculated based on the reduced salary unless otherwise agreed.
  • There is also the possibility, in certain occasions, of receiving unemployment benefit from an Unemployment Insurance Fund (A-kasse) in connection with a reduction of working hours and salary. Check this out at your A-kasse. Please also note the possibility of a division of labour, which you can read more about at ida.dk.

Also note the possibility of division of labour, which you can read more about at english.ida.dk

 

Always ask your A-kasse

In addition to these conditions, you should always contact your Unemployment Insurance Fund, as an agreement on working hours and pay cut will often affect the right to unemployment benefit and the right to early retirement.

Read more at Akademikernes A-kasse.