Salary cuts are a problem that many employees are facing due to the impact of COVID, which has affected the company’s or employer’s business in terms of income. When income does not come as expected, the company needs to manage expenses. The first option that is often used is to reduce human expenses, and requesting a salary cut is one way for the company to reduce its expenses when it is facing business problems.
Because Covid has had an impact for more than 2 years, it has affected almost every business. But it depends on whether it is affected more or less. Many companies have ordered their employees to stop working, with some giving them wages, some not, or even letting them go.
In the matter of salary reduction, can the company do this?
Regarding salary or wage reduction, I would like to refer to the Labor Protection Act, Section 76 and Section 144, which states that employers are prohibited from deducting wages, overtime pay, holiday pay, and holiday overtime pay, except for the following deductions:
(1) Pay income tax in the amount that the employee must pay or make other payments as prescribed by law.
(2) Pay union maintenance fees in accordance with the union’s regulations.
(3) Repay debts of a savings cooperative or other cooperatives of the same nature as a savings cooperative or debts that are for the welfare of the employees only, with prior consent from the employees.
(4) is a security deposit under Section 10 or compensation for damages to the employer which the employee has intentionally or grossly negligently committed, with the employee’s consent.
(5) is a savings fund in accordance with the agreement regarding the savings fund.
Therefore, in the matter of salary reduction, the company cannot do so (if there are reasons or reasons other than the 5 cases mentioned above).
But on the other hand, we have to sympathize with their companies because the impact of COVID has caused many companies that could not survive to lose their liquidity and had to close down. As for the companies that are still around (but we don’t know how long they will be able to continue) they have started asking for cooperation from their employees to reduce their salaries so that the company can survive. The matter of asking for cooperation from employees to reduce their salaries has happened many times before during the economic crisis.
In the matter of salary reduction, can employees not agree?
In this case, the employer cannot reduce the employee’s salary if the employee does not agree, because this is considered an unfair change in employment conditions for the employee.
But if any employee voluntarily agrees because they want to help ease the burden of the employer or company, they can do so. However, there must be a contract that clearly states how much the employee is willing to reduce their salary, such as how many baht or how many percent, and the employee must sign their consent. The employee’s signature on consent to reduce their salary must not be lower than the minimum wage.
For anyone who signs this contract, it will be effective only for the person who signs it. If anyone does not agree to sign it, it will not be effective for that person.
If any employee refuses to sign a salary reduction, what will the employer or company do?
In this case, it depends on the employer or company as to what measures to take to deal with this matter. For example, if it is the most severe case, the company may notify the employee who did not sign to agree to the salary reduction, and the company will pay compensation and advance notice as required by law. Read more at: What to do if you are suddenly fired and laid off?
For the employee, they will have to choose which way to go: will they continue to help the company with a reduced salary, or will they choose to walk away or let them terminate their contract (but will the employer or company have the severance pay for us? This is something that we have to wait and see).
If employers or companies choose to ask employees to reduce their salaries, what should they do?
Because this is a request for cooperation, the executives themselves must show sincerity, communicate to the employees or all employees to understand the problem, the situation, the reasons, why they want everyone to cooperate in reducing their salaries, explain clearly how many percent or how many baht will be reduced, when will it be effective, how many days, months or years, and what the future measures will be if the situation returns to normal.
If we agree to a salary reduction and 3-4 months later the employer informs us that they are terminating our contract, will we receive compensation?
If we have signed a consent to a salary reduction and then 4 months later the company notifies us of termination, we will receive compensation. However, in this case, according to the labor law, the “final wage rate” must be used as the basis for calculating compensation, and the company must give advance notice.
For example, if we used to have a salary of 30,000 baht and we signed a consent to reduce the salary by 20% to 24,000 baht, and 4 months later the company notifies us of termination, the company must pay us compensation using the last salary rate, which is 24,000 baht, to calculate the compensation to be paid according to Section 118.
Is it fair? If employers or companies choose to do this, it means that employees or workers lose benefits because they will receive less compensation than they should receive, and the company benefits from reducing the cost of laying off employees.
Employers or companies like this, if they have the intention of taking advantage of employees or workers, are not doing the right thing. Therefore, employees or workers, before signing anything, must think carefully, think about the consequences that will follow. They should look at the behavior of the management from their past performance to see if they are trustworthy and likely to terminate us after we sign to agree to a salary reduction. Are they really sincere and have good intentions to help each other so that the company can survive? Or are they doing it for their own benefit?
If you are fired and the employee believes that the dismissal was unfair, what should you do?
In the event of being terminated and the employee believes that the termination is unfair, the employee still has the right to file a lawsuit with the Labor Court to have the court decide whether the termination is unfair or not, in order to claim damages. For more information, please contact the Department of Labor Protection and Welfare at 02 245 4310-4. Hotline 1506 press 3 and 1546. Or at https://www.labour.go.th.
Conclusion
Regarding salary reduction, it is best for employers and employees to have transparent discussions because many organizations have been affected by the COVID situation. Everyone understands this already. However, for accuracy and clarity, employers should set a timeframe and reach an understanding between both parties about how many days or months the salary will be reduced. Employees can then plan their income and expenses appropriately during the period of salary reduction.
Please reach an agreement with empathy. If the employer can survive, the employee must survive as well. Don’t use the COVID situation to take advantage of the employee. In the end, you will have to fight and have to go to court, which will only make things worse.
More information:
Regarding the statute of limitations, in the case of “unfair dismissal”, the law does not specifically specify the statute of limitations for filing a lawsuit. The time period for filing a lawsuit is therefore in accordance with the civil statute of limitations, which Section 164 of the Civil and Commercial Code specifies as 10 years from the date the right to claim arose. For more information , visit http://bit.ly/2iZ4A4d
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