Ruthless paycut

Last week, my colleagues had a briefing session conducted by HR Director who announced that our variable specialist allowances would be removed with effect 1 January 2015.When he made the announcement and solicited for our feedback, there was at least 5 minutes of silence. Everyone was too shell-shocked to react.

Since last year, there were lingering rumors that HR was hatching some plans to adjust our variable specialist allowances but we thought that the most drastic move that they would resort would be to incorporate the variable component into our basic pay. We never expect in our wildest dream that they would remove all our allowances. For many of us, the amount is a huge amount and make up at least 30% of our pay. So obviously we were very unhappy. The only consolation news was that the organization would remove the allowances in three years phases, so that affected staff would have time to adjust their personal finances.

This variable adjustable component was indicated in our salary contracts but the HR director insisted that the term “variable” means that the amount can be zero as well, subjected to individual performance and market condition. When he made that kind of statement, all my trust in the organization immediately flushed down the drain. I guess he missed the point on the contractual agreement. Employee is the most important asset of every organization and having trust is important. So even if you don’t wish to honor your agreement, the minimum you should do is to engage your staff and explain clearly the rationale before you made such drastic move. If you can communicate effectively, then the staff would accept the pay cuts even if the quantum is substantial, like in this case. Otherwise, there would be mistrusts, anger, frustration and anxiety among staff.

During the meeting, the HR Director was evasive and refused to give specific details on how we would not be “worse off” with the removal of this variable allowances because they would introduce some kind of mechanism to replace this loss. However, he would not elaborate on the specifics. Instead he pointed out that our salaries were already very competitive and that there would be a pay adjustment coming soon. But obviously he was trying to hook-wink us because this pay adjustment is across the board but we are talking about the removal of our specialist allowances which affected only the forty of us. I felt that in the absence of union in our organization, we were bullied by the HR.

The HR director bragged that the organization is generous enough to give us one year of grace period to adjust our financial commitments. And then, they would start to draw down this allowances within three years. When we pressed for more clarity, he said the details were not firmed up yet. He also keep emphasizing that our salaries are very competitive compared to the industry and they had to resort to this pay cut because they alluded that there was a mistake in their calculation of our pay packages. This really made my blood boils. In my opinion, the person who is overpaid is himself and not us.

This episode only served to instil in me the importance of minding my own business. Why let others control your income and set how your allowances, annual increments and promotion increments? In any case, I don’t trust this organization anymore and would only do the bare minimum required of me. However, I would still stay in this organization until the right time has come for me to leave.

Magically yours,
SG Wealth Builder

9 thoughts on “Ruthless paycut

  • December 12, 2014 at 5:09 am

    Hi Gerald

    People management is always the hardest to manage. But this incident serves a purpose that nothing is absolute in the company. You can loyal to the company for good and bad reason but the moment they require you to leave there won’t be love on the table.

    There’s a lot of restructuring in my company as well but I guess that’s how things work these days. It’s about cutting costs efficiency when your sales can’t go up further.

  • December 12, 2014 at 6:13 am

    But he is correct on the variable component explanation. In my company, we are aware of it too and it depends on few targets that we or the company need to achieve in order to get the variable component payout. Thing is people tends to take it for granted after long period of constant payout.

    In MOM website, it is stated “The amount of variable payment can be based on trading results, productivity or any criteria as agreed upon between employers, employees or trade unions. Variable payments are not compulsory unless such payment is provided for in the employment contract or collective agreement.” So check out your employment contract but in Sg, the environment is pro-business, so good luck.

  • December 12, 2014 at 7:00 am

    Cutting pay is still giving us chance and time for us to decide whether to stay or leave.

    Worst thing to happen to employees is retrenchment with token sum.

  • December 12, 2014 at 7:05 am


    Yes, I read this,as raised by the stockskeeper, before in the MOM Website. Variable component should not be taken for granted. Just like one ex-boss of mine said that bonus /variable is addition to your salary and that is dependent on many elements. Your base salary covers what you should do, only if you do extra/perform extra and coupled with good business sales,then you get the bonus /variable.

    I feel your HR has not been very skilled in managing staffs emotions and resistance and he is not able to cushion the effect. OR probably he is not the affected lot! the one year grace period and withdrawing over the three years don’t sound any more comforting.

  • December 12, 2014 at 9:11 am

    Hi Gerald,

    Your HR is right doesn’t make he any less EQ idiot. He is doing HR, if it is supposed to force down the throat, I think any boss or department heads can break the news through email.

    Emphasizing competitive pay is rubbing salt on wound.

    That said, it is always LPPL when such things happen. Sigh …

  • December 12, 2014 at 9:59 am

    Not happy leave lor. No one is stopping you!

  • December 15, 2014 at 2:28 pm

    Hi, can share if your employer is a bank or MNC?

  • December 23, 2014 at 1:31 am

    this could happened to anyone of us!

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