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How to Handle a Cut in Your Pay (part 1)

So you have noticed that things are a bit slow around your work, it could be a warning sign that your company has fallen on tough times.  Well, you learn the good news, you still have a job.  However, before you can wipe the sweat from your brow, you learn the bad news… You pay is being cut in half.

If you work as a salaried or per hour employee, don’t accept anything immediately when your supervisor breaks the bad news to you.  According to Caroline M.L. Potter, Yahoo! HotJobs, “In other words, refrain from conveying any type of agreement, either verbally or in writing. If pushed, you may say something to the effect of, “This is a lot to process right now. I need to think about this and discuss it with my family this evening.”

“What you want to do is buy yourself some time. Why? You need to find out all the facts surrounding a salary reduction before you accept it.”  Potter says that a pay cut can affect your future severance package and compensation for unused sick or vacation days as those numbers are usually calculated based on your current salary — as are unemployment benefits. “Also, the reduced compensation could affect salary negotiations with future employers as your last salary of record could be significantly less than what you are really worth.” says Potter

Keep in mind that because most people are employed “at will,” your employer can end the arrangement at any time in addition to lowering your salary… as long as there is a legitimate business reason.  Remember, all your employer has to pay you is minimum wage.

Although laws vary from state to state, you might be able to quit and still collect unemployment if your pay has been cut by an unreasonable percentage.  Be sure to check with your local unemployment office before you do anything.

OK, so you have decided to continue working, probably a good choice sine we are not exactly in a booming employment environment, how are you going to survive on half of your original pay?

First things first… you need to tell your spouse.  If you feel worried about the conversation, go for a drive or sit quietly someplace for a few minutes and plan what you’ll say before you go home. When telling your spouse about your significant cut in pay, be undeviating.  Convey your company’s decision as a matter of fact. You might say something like, “I got some bad news today at work, the company is making some cuts for business reasons, and my pay has been cut in half.” you might add, “the good news is that I still have a job!”  Try not to let your disappointment show through too much as your spouse is likely going to have the same reactions and feel the same emotions that you did when you were first told of the cut back.

…to be continued

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