[orangesite]

An agreement to take a pay cut is effectively an agreement to commit to an ongoing investment of 10% of your current salary in the company for an unspecified amount of time for no return and the sacrifice of the capital amount.

A good benchmark would be to ask yourself what the return would be if you invested 10% of your salary in unit trusts over the same time period.

This is not a good deal and I would be hesitant to entrust my career to a management team who feel it is okay to ask this of their employees.

There are a number of ways this could have been structured, including:

1. An agreement to pay back the 10% plus interest @ prime within a specified time-frame.

2. Issuing of a comparable amount of shares in the company in exchange for the 10%. Dividend-bearing if a private company, trade-able on the JSE if public.

[folivore]

Thanks. That's a new way of looking at it for me. No form of compensation was offered other than "wait and see." So I don't feel confident that they will make up for it if things do get better. I don't want to suffer through a pay cut and then be laid off if they do worse either.

I have some options in terms of contacts. Perhaps it's a good idea to reach out.