I think your friend has badly mishandled the situation and is encountering difficulties which she has caused. She simply cannot 'round-up' the staff and give notice of a pay cut, it doesn't work like that.
There is a contract (written or not) between the company and each staff member which specifies the rate of pay, if she wishes to change that contract, then it must be by agreement or else she has broken the contract.
Its natural the staff would refuse the pay cut, if the communication was as blunt as you describe.
Your friend will now have to try and recover the situation and use a bit of common sense, communicate openly and directly, explain the company situation and earn some good-will back.
If your friend can't afford to pay wages, then redundancy must commence immediatly, does your friend know how to do this? There are strict procedures, she needs to be aware of them.
The question regarding letting everyone go and hiring new people is absurd, what will that solve? The new staff will just react the same way as the old staff when they discover what a bad boss she is.
Your friend needs to get real, get some training in employment law and do it fast!
. If she "feels like letting them all go" based on the reasons you have given, she might want to read up on employment law and find out how much trouble she could be in if she doesn't play by the rules.
The best approach is to be completely up front with the staff, even to the point of giving some financial information from the latest accounts to back up the points.
It is then up to the staff to make their own judgement as to their best course of action.
Not knowing the business it is very hard to advise any further.
If any of the staff can be let go without being replaced, then this is one option.
If things are that critical, and the business cannot be run with a reduction in the numbers, then closure of the business is a real possibility unless the necessary cuts can be found elsewhere.
This stark reality needs to be made clear to the staff.
Can your friend contact IBEC or a local chamber of commerce to assist her with the legalities of what she needs to do.
Dont worry about the employees - there were redundancies where I work over a year ago and no it wasn't handled brilliantly - but the owners of the company were apolagetic and they did explain that foor them this was unfortunatly a very new experience for them...
She has displayed complete ignorance of Equality legislation with her approach above. She has discriminated against the single individuals on grounds of their family status. This may well cost her dearly.Also, I must also add that out of the 7 employees, only 5 have been asked to take pay cuts, the reason for this is that the other two have young families, the other five individuals concerned are all single - now perhaps this is where the problem lies, I don't know!
To assume that she is a bad boss is some leap based on my post! I have always felt that she has been extremely fair and always played by the rules.
I do agree about the pay cut to 5 out of 7 being unfair, this was purely based on the facts that those two staff members (more senior staff) have young families.
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