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Do I have to give employees salary increases if I'm downsizing?

by , 03 November 2014
Let's say your business is struggling financially. As a result, you decide to downsize so you can be profitable again.

But your dilemma is, that there's a longstanding agreement in place between you and your employees and it says you must give them salary increases.

Since you're in financial trouble and are downsizing, you're now wondering if you still need to honour this agreement and give your employees salary increases.

Read on to find out the answer so you don't find yourself on the wrong side of labour law.


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Answer: Must you still award salary increases if you're downsizing and you have an agreement?

 
Experts behind the Labour Law for Managers Loose Leaf Service explain that you CAN'T unilaterally reduce or change an employee's salary or benefits. This includes any contractual right they might have to an increase.
 
If you have financial problems, our labour laws say, you must consult with your employees over measures to avoid retrenching them.
 
One option would be to hold back increases or reduce salaries and benefits. And you'll have to discuss this with your employees.
 
The important point is, you can't force your employees to accept a reduction in salary and benefits, or give up their right to an increase. If you don't agree on these issues and there are no other viable options, you'd have to start a retrenchment process.
 
Here's your seven step guide to implementing retrenchments legally.
 
Now that you know what the law says about salary increases and downsizing, comply.
 
PS: For more information on salaries, check out the Labour Law for Managers Loose Leaf Service. The Loose Leaf Service also gives you all the details you need for maximum protection in labour-related problems.

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