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Monday, March 16, 2009

Incisive Wipes 2% from Payroll Costs

Incisive Media, on of the debt laden b2b houses has told staff to take a weeks unpaid leave at Christmas. According to Press Gazette this will save £1m this year, implying that the total payroll costs are £52m. This initiative is to minimise redundancies according to UK CEO James Hanbury. The maths says the opportunity cost is 30 jobs. Like so many of these initiatives, whilst necessary, this approach does not address the fundamental change in the economic model that will be required for long term success.

On a technicality, Incisive are reducing pay each month as the mechanism to pay for this, so as to avoid a very small payment to staff at Christmas which is when the leave has to be taken. Deductions from pay require the permission of the staff. I doubt that many staff would say no under pressure to save their colleagues jobs but what if someone refused to give the company permission to make a payroll deduction? Does anybody know what the legal position of the Company and employee would be?

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At 9:08 pm, Anonymous Anonymous said...

It is an fascinating situation. In fact at least one B2B company that ha sdone this is unsure and have had conflicting legal advise.

One QC's view is:

Legally directors have to take the interests of shareholders above staff (apart from health & safety issues obviously).

You are allowed to change terms and conditions. This includes salary but pay is a difficult issue.

My understanding is that an employee could challenge this but would have to resign first - and claim constructive dismisal. They would probably win - maybe getting one year's salary - but might not as tribunals have changed their attitude in the last six months. Before employees were almost certain to win. Now it is more of a level playing field. Is anyone willing to risk their job to find out? Especially as you can get close to one year's salary if you ask for redundancy and negotiate hard


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