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A remuneration tug of war

Unfair DismissalNovember 13, 2014

A remuneration tug of war (Last Updated On: November 13, 2014)

A retail clothing brand Zehut Pty Ltd which sells urbrands has wrongfully sacked a store manager after she refused to accept a pay cut. The employee, who worked in the head office, in a managerial position for over 12 years moved to a poorly performing store in Chatswood and had agreed to stay on the same remuneration package.

After eleven months the store had increased turnover and had successfully become one of the top six urbrands stores in Australia. However the company’s director told her that she needed to take a pay cut as she was working in a store managers role and not in the previous managerial position. Zehut Pty Ltd said that they were paying the employee remuneration of $80,000 a year with a car, whilst other store managers were on $54,000 and without a car.

The employee clearly stated in writing that she did not accept the change and did not wish to resign. However the director told the employee that she had to take the cut and if she didn’t agree to the new pay structure they would ‘force her to resign’.

The Fair Work Commission Justice Boulton found that the issue was not in the initial pay cut but rather the unreasonable action taken by Zehut Pty Ltd when the director forced resignation upon the employee.

Justice Boulton stated that “a more appropriate way of dealing with the issues relating to the [employee’s] remuneration package might have been found if different procedures involving human resource expertise had been followed”.

If the employer had received employment relations advice the negotiation could have been resolved in a more equal and optimistic way. The store manager had been working for the company for over 12 years, she correctly addressed the situation in writing and the employer failed to take into consideration the necessary steps in ending the employment.

For SMEs in Australia to stay competitive they may need to issue pay cuts to staff. If your business needs to change current remuneration packages and you need advice, Employsure can help. Call us today on 1300 651 415 or fill in the form below. Employsure can advise employers on the best financial outcome of all employment relations situations so that you have piece of mind and can focus on other areas of your business.

*Information sourced via Workplace Express website.

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