Unjust, unjust, undignified. These are the thoughts that all you can think of when your employer has announced that your salary has been cut, unless the company is struggling financially, then a pay cut is expected, and it’s not your results or personal reasons. The only thing you can do now is knowing what are your rights and options as an employee when facing a salary reduction. Here are the steps to handle your situation and decide your future career path.
What is a Pay Cut and how to find out?
A pay cut is a reduction in an employee’s salary. Pay cuts are often implemented to reduce layoffs, corporate restructuring and cost-saving initiatives while saving the company money during a difficult economic period. This decision can be permanent or temporary until the company’s financial status improves. The outcome could significantly impact a worker’s benefits, bonuses and raises. If you are looking for further details and explanation, you should never hesitate to walk in and ask questions:
1. Why is this happening?
2. When will it take effect?
3. How many employees are affected?
4. Will there be more pay cuts in the future?
5. Are benefits going to be cut as well?
6. Are training costs still be provided?
7. Will the income be restored back after the company financial status improved?
8. What are the company’s long-term plans?
9. Will me workload decrease or remain the same?
How do you handle a Pay Cut?
Once you have accepted the pay cut, your next step is to look for ways in handling it. First and foremost, you need to look into your budget. Start assessing your budget and determine what are the budget cuts that you need to consider in terms of rental/mortgage, utilities, transportation, food and saving. Assess if you can still save and invest despite having a pay cut. Most of all, you can consider finding ways to earn more money through freelancing, part-time jobs or contract-based.
Consider negotiating with your employer
If you opted to remain instead of resigning and look for a new job, you should consider discussing about what your company can extend in lieu of your pay cut. It’s also worth looking into your employment contract whether it stipulates compensation. Your employer would certainly look into renegotiating the contract just to adjusting your pay and you need to decide whether it’s okay for you or not.
Consider whether it’s time for you to look for a new job
If you’ve been thinking of resigning before taking a pay cut, maybe now’s the best time to move on. Start your job-hunting as soon as you can if you haven’t done any search yet. This is also a good time for you to update your resume and reconnect to your network.
Reassess your long and short-term financial goals
Determining your objectives and matching them with your current financial status is the key to financial goal-setting. It is even more important when you receive a pay cut in the short notice. Write down a list to determine a set of common goals while considering these guidelines while setting your financial goals:
- Recognise your goals: These could be saving for a down payment for your new house, setting up funds for the education of your children, paying off unsecured debts, saving for the proverbial rainy day, or putting together a vacation fund.
- Setting up an expenditure plan: Take a serious look at your current income and expenses. Stop any non-essential expenses and search for innovative ways to save up your money.
- Manage your groundwork well: Look into the best ways to earn more money by reading investment guides or search for investment information in the net.
- Evaluate your progress on a monthly basis: This will help you ascertain if your financial plan is feasible or not. If you are not happy with the current progress on a specific goal, double-take on your approach and apply any necessary changes in your goal setting plan.
- Short term gals: A short term goal are mainly set to be achieved within a year. The exact time for the short term goal depends on the date it has to be achieved, the estimated cost and the amount of savings needed for the goal. Examples include your family trip, purchasing new furniture, mobile devices, etc.
- Long term goals:These goals would take at least 5 years or more to achieve. Saving to buy a house, a car, to fund for your children’s education are some of the prime examples.
What is your take when you receive a pay cut from your company? Leave us your thoughts on the comment sections below. Head over to Jobstore.com and unveil your next job opportunity.
You Jing is a content writer who writes career and lifestyle contents to inspire job seekers and employers alike on their journey to work-life balance, empowerment and transformation in their career path.
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