We know the impact COVID-19 has had on unemployment rates. But for many who’ve been fortunate to remain employed throughout the pandemic, it’s still come at a cost.
As of December, over a third of full-time workers had been on the receiving end of a pay cut in 2020, according to a survey from MagnifyMoney. And cuts have impacted more than salaries, too. The same survey found that 15% of workers said their company had decided not to award bonuses, while another 13% said they’d been given a reduced bonus. Still other workers have seen cuts to key employee benefits — just two months into the pandemic, for instance, about one in 10 employers had already announced plans to suspend or reduce 401(k) contributions.
Billed as temporary necessities, these cuts were designed to help companies stay afloat during unprecedented times. But as we move into the second calendar year to be characterized by COVID, many have yet to see their former pay and benefits restored — and that’s held true for women especially. According to MagnifyMoney’s survey, while 52% of men said their pay had been restored as of December, only 44% of women said the same.
For leaders and senior-level executives who fall into this category, there may come a point when the wait for restored pay and benefits is no longer worthwhile. But when, exactly, is that point? And what are the options for recourse when a company has exceeded its originally agreed-upon terms for these cuts?
We heard from experts who told us how to determine whether the situation is worth sticking out — or if it’s time to move on.
My pay and/or benefits were cut at the start of COVID-19, and they haven’t been restored. Now what?
Start asking questions.
As a senior leader at your company, you should have some idea as to the state of its financial health — and therefore, what that means for your own pay and benefits. If you’ve been kept in the dark on this subject, however, it’s time to start probing, advised career advice author Bud Whitehouse.
“If the subject hasn’t been breached by C-level management, it’s time to start asking questions,” he said. “What are the existing plans for ending the compensation cutback? When will they be reviewed? What is the outlook? Have conditions changed enough to warrant a review now? What exactly will precipitate a review? Will there be reimbursement? Why? The same questions apply if the time for the cutback has elapsed.”
Re-negotiate your salary and benefits, and get it in writing.
Leaders who were forced to take pay or benefits cuts should be “laser-focused” on using a written employment agreement to renegotiate their standing, according to Lauren Blair, a legal writer and lawyer who’s worked in employment law counseling and litigation.
“My general advice to a leader who took an open-ended pay or benefits cut is to request that the terms of the salary reduction — how much and for how long — be in writing,” Blair said. “It’s important for the writing to make clear that the pay cut is temporary due to the coronavirus pandemic.”
If you do have these terms in writing, and the company is not honoring them, there may be some options for legal recourse at your disposal: “If the company has exceeded the originally agreed-upon time limit or KPIs for the cuts, then the employee likely has a claim for breach of contract or for failure to pay agreed-upon wages,” she added.
Find out whether you’re eligible for a bonus when things are stable again.
To make up for lost income in 2020, Blair also advised pursuing a post-pandemic bonus during your renegotiation conversations: “Leaders should consider asking for a bonus once operations get back to normal or by year end for 2021, to make up for the temporary pay reduction,” she said.
But before broaching this topic, career coach and writer Carlota Zimmerman recommended lining up your case for the value you’ve added to the company over the past several months — the same as you would when negotiating a raise.
“Review the cuts you endured, as well as all of your work accomplishments,” she said. “Ideally, you want to go into meetings with bullet points of your triumphs: clients won, projects completed under deadline and budget, money made for the company. It’s also helpful if you can articulate exactly what you expect from the company moving forward.”
Consider the situation of other employees at the company.
No one should be underpaid for the work they’re doing — and that goes for less-senior staff at your company, too. When evaluating whether it’s time to seriously push for a restoration of your former pay, consider whether employees who aren’t on the leadership team have this same option. If they’re continuing to work for less and your current pay is livable, that should factor into your perspective, suggested Jim Pendergast, Senior Vice President of altLINE Sobanco.
“With leadership has to come a certain expectation of sacrifice,” Pendergast said. “In many cases, that means biting the bullet in terms of sustained pay cuts in addition to reduced bonuses and other cash incentives.”
Determine whether it’s time to move on.
If you’re weighing whether it’s time to start pursuing new opportunities, Prendergast advised doing so with the big picture in mind, rather than zeroing in on pay.
“The question isn’t necessarily how long you should ‘stick it out’ — everyone is doing that right now — but what you value and seek in your career, and how changing roles right now might affect that,” he said. “You’re still human, and everyone is entitled to compensation fitting her or his role, experience and contributions. But switching roles, even an executive one, simply for the sake of pay isn’t always advised. At this level of your career, there are other factors to consider.”
In the end, regardless of whether you actually choose to leave, it never hurts to see what else is out there — especially while you have the security of currently being employed.
“For people in leadership roles, you should always be in the position of promoting yourself and networking,” Jeff Altman, a career and leadership coach, said. “After all, you’re not going to find your new position by submitting a resume on a job board very often. You’re going to find it because of your network and because of the reputation you create for yourself.”
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