If the worker does not accept a reduction in salary, the company can continue to pay what it earns, or it can terminate the contract. However, if the second option is chosen, it constitutes a termination without just cause, as the worker is not obligated to accept a salary cut. Consequently, the company is obliged to compensate the worker according to the type of contract.
Let's address the following concern briefly. Is it possible to negotiate a decrease in an employee's basic salary if their performance was below expectations, leading the company to consider removing them from their current position?
There is misinformation regarding the belief that once a salary is reduced, it cannot be further decreased. This notion is inaccurate. Let's clarify.
The Labor Code stipulates a minimum wage based on the days and hours worked. The law prohibits paying a salary lower than the established minimum for the hours worked. Beyond that, the remuneration can be mutually agreed upon by the parties.
For instance, if an employee currently earns 2 million pesos with a Monday to Friday, 8 am to 6 pm schedule, the employer might propose reducing the salary to $1,500,000 or terminating the contract, citing financial difficulties.
To ensure the legality of reducing the salary, the worker's free consent is essential. The worker must willingly and without coercion accept the salary reduction in writing, following the guidelines of the Civil Code. Both the employer and the worker should document their agreement on the reduced salary.
This arrangement is legally valid as the worker consents freely. Moreover, if the reduced amount still meets the minimum wage requirements based on the hours worked, such as in the case of $1,500,000 covering the minimum wage in Colombia, it remains compliant.
Conversely, attempting to lower the salary of an employee already earning the minimum wage for their working hours, such as someone working 48 hours a week, is prohibited. Any agreement to reduce such a salary would be deemed ineffective.
If the worker declines the proposed salary reduction, the company can either maintain the current salary or terminate the contract. Opting for termination in this scenario would be considered unjustified as the worker is not obliged to accept a reduction in salary, leading to the necessity of compensating the worker as per the contract type.
From India, Mumbai
54Let's address the following concern briefly. Is it possible to negotiate a decrease in an employee's basic salary if their performance was below expectations, leading the company to consider removing them from their current position?
There is misinformation regarding the belief that once a salary is reduced, it cannot be further decreased. This notion is inaccurate. Let's clarify.
The Labor Code stipulates a minimum wage based on the days and hours worked. The law prohibits paying a salary lower than the established minimum for the hours worked. Beyond that, the remuneration can be mutually agreed upon by the parties.
For instance, if an employee currently earns 2 million pesos with a Monday to Friday, 8 am to 6 pm schedule, the employer might propose reducing the salary to $1,500,000 or terminating the contract, citing financial difficulties.
To ensure the legality of reducing the salary, the worker's free consent is essential. The worker must willingly and without coercion accept the salary reduction in writing, following the guidelines of the Civil Code. Both the employer and the worker should document their agreement on the reduced salary.
This arrangement is legally valid as the worker consents freely. Moreover, if the reduced amount still meets the minimum wage requirements based on the hours worked, such as in the case of $1,500,000 covering the minimum wage in Colombia, it remains compliant.
Conversely, attempting to lower the salary of an employee already earning the minimum wage for their working hours, such as someone working 48 hours a week, is prohibited. Any agreement to reduce such a salary would be deemed ineffective.
If the worker declines the proposed salary reduction, the company can either maintain the current salary or terminate the contract. Opting for termination in this scenario would be considered unjustified as the worker is not obliged to accept a reduction in salary, leading to the necessity of compensating the worker as per the contract type.
From India, Mumbai
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