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Pay Freeze Comments

Pay Freeze Comments
 
Recent research for the CBI said that 'half of UK firms plan pay freeze' - Bird & Bird Employment partner Elizabeth Laing comments:
 
Most contracts don't have an express right to a pay rise.  Many do have the right to a review, but with no guarantee of a rise.  Even if the employer was in breach of contract by not implementing a payrise (for example if the contract provides the right to an increase which is not being honoured) most employees in the current climate are in practice likely to take the view that it is better to have a job with lower pay than to be suing their employer.   
 
Employers who are in the unusual position of being contractually bound to award payrises would be well advised to explain the reasons for not giving the payrise, and seeking the employee's agreement to the situation.  If such a process is followed but the employee still asserts the right to the payrise there could be a claim for constructive dismissal, which would involve a claims for breach of contract and unfair dismissal.  An unfair dismissal claim could be potentially defended if the employer has acted reasonably in the process. 
 
However, this situation is quite unlikely to arise in practice.  In fact, a number of employees have in the past few months agreed to pay cuts.

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