As the bosses at TV giant the BBC prepare to cut some of their male presenters’ salaries in a bid to rectify and stamp out pay gaps among their workforce, we look at some of the potential HR pitfalls which could follow.
It was revealed by the BBC that pay gaps were present among the BBC’s male and female employees and that following this reveal, six male employees agreed to receive a wage cut of up to 30 per cent from their annual salaries. Radio Four’s presenter John Humphreys stated this move was a reasonable request in light of the corporation’s reduced budgets. However, this is not a move which is usually undertaken by employers!!!
Legally, an employer doesn’t have the right and cannot impose pay cuts upon its employees without risking a claim. If the contract of employment sets out the details of salary entitlement or even if it doesn’t and pay has been made at a set rate for some time (in which case custom and practice may apply), then agreement and consultation is the best bet.
The BBC appears to have approached this by seeking employees consent and agreement to salary reductions. There is no obligation on the employee to give consent and the employee also retains the right to seek legal advice and take action to prevent such a change taking place.
If an employer wishes to reduce an employee’s salary without their consent, the employee could be entitled to:
– resign and pursue a claim for constructive unfair dismissal; or
– continue to work and sue for compensation for the loss they have suffered under a Breach of Contract Claim.
The employer could choose to terminate the employee’s contract of employment by serving them with contractual notice and then offering a new contract on a lower salary. Should the employer decide to pursue this course of action, as long as the pay cut is justified and there is a valid business rationale and the process is legally compliant this will help to avoid costly tribunal claims.
However, do be aware that employees whose contracts are terminated, can bring claims for unfair dismissal, even if they have accepted the new contract. Consultation will be required if a number of employees are affected by proposals like these and an employer is legally obliged to consult. This may be with a trade union or employee representatives. Failing to do so could result in hefty compensation claims.
Results of a claim for unfair dismissal will depend upon:
– whether the employer can establish a substantial business reason for the pay reduction;
– whether the employee would suffer disadvantages as a result of the changes and whether these outweighed the advantages to the employer of implementing the changes;
– whether the employer had chosen to engage in full consultation about the salary cut;
– whether a majority of the employees accepted the changes; and
– whether the employer had acted reasonably when responding to employee objections.
The BBC case is rather unique. Partly funded by its licence payers (to whom it is accountable), it is very open to public scrutiny. It has a high profile with many of its presenters approaching or having reached celebrity status having become household names. Therefore, should the male presenters not have agreed to the reduced salary, the courts of public opinion may not have been so favourable towards those not agreeing to pay reductions and media type consequences would have been a distinct possibility.
The issue of equality and fairness in the workplace has become priority, companies are being judged on how they conduct themselves.
The UK is one of the first countries in the world to put into place gender pay reporting legislation. The legislation applies to companies with 250 or more employees, requiring these companies to publish statutory calculations illustrating any pay gap between male and female employees. It is a new era of transparency that many have welcomed.
One may argue that a logical answer to closing the gender pay gap would be to increase the wages of female workers rather than to reduce the wages of their male counterparts. However, as the BBC may well argue having paid pay high wages to big names, this wasn’t a financially viable option.
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