Can a Salary Be Cut Without Warning?

Man packing up office belongings in box, elevated view
••• Ryan McVay/Digital Vision/Getty Images

When businesses need to save money, some opt to cut employees' pay rather than lay off people. This helps save jobs, but pay cuts also can be rough. Your boss typically doesn't have to discuss a potential pay cut with you; he can simply inform you that your salary will be reduced, and you can choose whether to stay at the job.

Contract Agreement

When you have an employment contract in place, your employer can't cut your salary without reworking the agreement. In this case, he must discuss the potential pay cut with you and you must agree to it. If you don't agree, he must pay you the contractual amount through the end of the agreement term, after which he can present you with a new agreement with a lower salary. If you don't accept the new agreement, you effectively quit your job.

At-Will Employee

When you aren't working under a contract, your employer can cut your salary without warning in most cases. Don't confuse a wage agreement with a contract; if you received a written offer for your job that spelled out your salary, it's not necessarily a contract unless it spells out a specific duration for the agreement. Without a contract, you work at the will of the employer. He can fire you, cut your hours or reduce your salary at any time, as long as the reductions aren't discriminatory.


If there's any good news about the fact that your employer can legally cut your salary, it's that the cut can't be retroactive. This means your employer can't come to you on payday and say that your check is reduced. Pay cuts can become effective only after your employer notifies you, although they can start immediately after the notification. If you continue to work after being notified of your salary cut, you agree to the cut. You can try to negotiate the salary reduction with your boss, but if he won't budge, your options are to accept the cut or quit.


When an employer cuts your salary in a discriminatory way, it's illegal. He can't cut your pay because of your gender, age, race, religion or pregnancy, for example. He can single you out, cutting only your pay and no one else's, but it can't be for a discriminatory reason. It must be for a reason such as your lack of seniority or poor job performance, for example.

Related Articles