Can Your Employer Reduce Your Pay?

Budget Cutting

Most of us are employees who were hired at will. This means you have no formal employment contract or are not covered by a union bargaining agreement. At will employees may have their hours or pay reduced or may be terminated at will by the employer..

The usual reason why an employer will lower salaries or reduce employee hours is because the business is facing a downturn. In order to avoid bankruptcy or layoffs or terminating employees the employer will ask the employees to accept reduced hours or reduced pay. The employer still needs its employees in order to continue conducting the business.

When the employer asks for pay or hourly reductions it is expected this reduction will be across the board and include all employees. It helps if the employee is given some idea about how long the reduction will last – perhaps six month or one year.
Hopefully after a period of time the employer will be able to return salaries and hours to their normal levels. It is up to the employee whether or not he will accept the reduction or choose to seek employment elsewhere.


An employer may need to reduce your salary if your job description has changed. If you have gone from a supervisory position to a lesser position you salary range may be lowered to conform with others performing the same or similar tasks.

If you are not able to satisfactorily perform in your current position you employer may offer you a different position more suited to your skills, but which is a lower pay grade.

You employer needs to notify you in advance of any salary reduction.

The employer may not use any type of discrimination when reducing salary or reducing hours.

Employees are never happy about a pay cut or a cut in hours. Employers do not like making these cuts either since they want to retain their well trained good employees and cuts may cause these employees to leave the company.

At times these cuts may be required in order to maintain the business until it can resume a more stable financial position,.