If I Refuse a 20 Percent Pay Cut, Is it a Resignation or Termination?

by Evil HR Lady on September 16, 2020

I would appreciate some advice for my particular case.  My company recently got bought out by a big corporate company. Today I got an offer letter that offers a 20% pay cut and that would increase my benefit premiums from $0 to $200/month, all for the exact same role and tasks. 

As you can imagine, I am not happy about it. And it was a bigger slap in the face when the HR person from the new company didn’t even know I existed (I work remotely, while 90% of the company is in another city). 

I’ve sent an email to the HR team at my current company inquiring if this was just an oversight but haven’t heard back from them. The CEO did say in a slack room for questions of employees that anyone who will not take their offer from the new merged company can just resign…

If I don’t accept that offer letter, or they can’t justify this pay decrease, and if I don’t “officially” resign, does this just mean the company can terminate me at the close of the merger? 

A couple of things: I wouldn’t take it as a slap in the face that the new HR department didn’t know you exist. They know enough to get you a new offer letter. When you’re merging with another company–no matter the size–the new HR department won’t instantly know everything.

Second, I love email and text messaging and any way of communicating that doesn’t require speaking on the phone. But, it’s also easier for those things to get missed. Pick up the phone and call.

If all employees received a 20 percent pay cut, they will be super tired of answering questions, but that’s the job.

Then to get to your real question: what happens if you just say no? Well, as you said, you’ll be terminated. They’ve offered you a job, they’ve given you written notice, and you can say yes or no. But, the real question is, will you be eligible for unemployment if you say no.

It’s not like you can do a tricky thing where you just fail to accept and they terminate and now it’s a layoff rather than a resignation and you are eligible for unemployment! They will (undoubtedly) report to the unemployment office that you resigned.

Your state may consider a pay cut of 20 percent to be severe enough to count as a legitimate reason for resigning. I don’t know.

But, keep in mind that the federal subsidy is gone and so your unemployment check will be less than your current salary minus 20 percent, plus you’ll have to pay for COBRA.

My advice? Immediately start looking for a new job and as soon as you get one, resign. But in the meantime, keep this one.

Now, if you were actually thinking if you just stay quiet, will they forget to lower your salary? No, they won’t. That’s happening.

And i’m sorry. That sucks.

{ 5 comments… read them below or add one }

William J Corley September 16, 2020 at 5:02 pm

Not sure this would be a termination by the new company as there is an offer of employment from the new company, as part of an acquisition. If she does not accept the offer at the close date of the acquisition, she will no longer be employed by the predecessor firm and terminated by the predecessor. She was never employed by the new company.

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jccbeach September 16, 2020 at 5:46 pm

Is negotiation a possibility? Can you check out the new company’s job descriptions/classifications and demonstrate why your functions should receive a higher rate of pay? Good luck.

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Phil September 16, 2020 at 6:36 pm

The Current Unpleasantness really brings out the crappy in crappy employers.

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Emily September 16, 2020 at 8:18 pm

Always email so you have a paper trail. I would accept the offer and look like mad for a new job. COBRA is way expensive and now is not the time to worry about healthcare. If they aren’t aware you work remotely it is possible you will be first on the list for layoffs or they are going to tell you to start coming to the office or be terminated. Be prepared.

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MariaRose September 17, 2020 at 2:15 am

Wow, this situation sounds so much like the job situation I had to deal with, until the company I worked for decided to close permanently. Basically what this person is being told, is that to keep the job, you need to accept a paycut and pay the $200 premium for that “employer healthcare coverage”. It is a double hit to the pocket. less money coming in and more expense to the budget.
I know the first reaction when you get news like this is to instantly want to quit (along with the screaming about how under-appreciated your skills are being determined) but you have to take that deep breathe and evaluate your personal financial situation. Can you afford to be unemployed for any period of time–in other words do you have 6 months of savings to pay your bills while you find another job? If your answer is negative, then you need to at least take the offer,while you evaluate the job field. Most employers work from the notion that they want the most amount of skills for the least amount of money. A work at home job doesn’t need all those job perks, that they have to offer for someone who has to report phsyically to the job, so naturally the job pay may lower. You have to realize you are basing your expected pay on an older model of pay levels. You need to adjust expectations to current market, especially if you want to continue to be that work from home person. You are merely a number to them not a person.
Now as to the question of legality in status, for collecting unemployment benefits, you may have to go by whatever is the law classification in the state you reside in, versus the state the company is based in, as to where this is a condition that is labeled a layoff or job rejection, which is the same as quitting. It sounds like the company is covering their Ps&Qs so that if you reject their offer, they can legally deny unemployment benefits. I advise that youbdo what works best for you financially, leave the emotion at the door. Whatever you do, make sure you have a paper trail, which must include hardcopy of every communication between you and the company. They sent you a letter, Send them back a written response in paper by certified mail via the USPS so you know they received the letter, along with sending an email response and a phone call to the specific office. Keep copies of all correspondence. If you are unsure of the labor laws you may have to consult a lawyer who specializes in labor laws but do this now before the offer is rescinded and you have nothing. I also would check your state’s healthcare insurance options , you may find coverage for a lower premium and won’t have to pay as much. When they pass the premium cost on to you they are also passing the out of pocket cost to you while also limiting your options of coverage. I am speaking from experience, I lost coverage. So if you have to pay, make it a healthcare plan that meets your needs not their pockets.

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