Employers looking to cut costs by reducing staff pay or benefits could face an expensive backlash, an employment lawyer has warned.

David Israel, partner at Wedlake Bell, said that employees whose salaries have been reduced could sue for unlawful deduction of wages and where employees agree to a reduction, they could still bring claims at any point in the future as long as the reduced salary is still in place, if they argue that true consent was not given.

Israel also warned that staff could claim for constructive dismissal if a cut in wages or benefits effectively forced them to quit and some employees could make similar claims even where benefits are not explicitly specified in the written contract itself, such as where discretionary Christmas bonuses have been paid at a fixed rate for several years.
 
Israel said: “As the financial crisis deepens, some employers are becoming more concerned that they are paying staff inflated wages or providing expensive benefits such as bonuses or generous maternity leave entitlements that they can no longer afford.
 
“Unilaterally cutting salaries or removing benefits, which to many people are just as important a part of the remuneration package, amounts to a fundamental breach of contract that employees may not take lying down.”