Pay or salary freeze notification letter template
Supporting information
Our Pay or Salary Freeze Notification Letter Template helps communicate temporary freezes in employee compensation, fostering transparency during challenging times.
If you need to inform an employee that there will be no annual increase in basic salary as a result of a pay freeze, issue this model letter template as notification.
Pay or salary freeze notification letter
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[Company name]
[Sender address]
[date]
[Recipient name]
[Recipient address]
Dear [Recipient first name],
Pay freeze
We refer to clause [number] of your contract of employment which provides for [an/a discretionary] annual review of your salary in [month].
As you may be aware, there has been a recent downturn in the Company's business as a result of external economic factors.
Unfortunately, as a direct result of this, the Company has been forced to implement a pay freeze for [all | a number of categories of] staff for the current year.
Therefore, we must now advise you that there will be no change to your salary in this year's pay review. Your salary will remain at £[amount] per [hour/week/annum].
[The next annual pay review will be in [month and year].
OR
The Company is unable to confirm the date of the next salary review but will keep you informed in this regard.]
We understand that this will be disappointing news and we regret that this situation has occurred. It was not a decision that we came to lightly but was made after careful consideration of all relevant information. We are hopeful that the situation will improve soon.
If you wish to discuss any aspect of this letter, please do not hesitate to contact [name].
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Yours [faithfully | sincerely],
[Sender name]
[Sender job title]
[Sender telephone]
[Sender email]
[For, and on behalf of [Company name] ]
What is this for?
A pay freeze notification letter informs employees of no salary increase due to various reasons.
It outlines the freeze's duration, reasons, and impacts, ensuring transparent communication and compliance with laws and contracts.
Addressing concerns and fostering employee understanding helps maintain positive relations amid the freeze.
Employment law compliance
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The Employment Rights Act 1996: This act sets out the rights and responsibilities of employees and employers, including the right of employees to receive notice of any changes to their pay. When issuing a pay freeze notification letter, it is important to ensure that the employee is given appropriate notice and that the notice is provided in writing.
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The Equality Act 2010: This act prohibits discrimination, harassment, and victimization on the basis of various protected characteristics, such as age, race, gender, and disability. When issuing a pay freeze notification letter, it is important to ensure that the pay freeze is applied fairly and does not discriminate against any particular group of employees.
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The National Minimum Wage Act 1998: This act sets out the minimum wage rates that must be paid to employees. When issuing a pay freeze notification letter, it is important to ensure that any pay freeze does not result in employees being paid below the minimum wage rates.
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The Employment Equality (Age) Regulations 2006: These regulations prohibit age discrimination in the workplace, including in relation to pay. When issuing a pay freeze notification letter, it is important to ensure that any pay freeze does not discriminate against employees on the basis of their age.
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The terms of the employment contract: When issuing a pay freeze notification letter, it is important to consider the terms of the employment contract, including any provisions relating to pay and any consultation requirements.
By considering these key employment laws when issuing a pay freeze notification letter, employers can ensure that they are acting fairly and legally and protecting the rights of their employees.
Decision-making milestones
| Step | Description | Responsibility | Timing |
| 1 | Identify the need for a pay freeze due to economic challenges or other reasons. | Management | As needed |
| 2 | Review employment contracts and relevant laws to ensure compliance with pay freeze implementation. | HR and Legal | Before drafting |
| 3 | Prepare the Pay Freeze Notification Letter outlining reasons, duration, and impacts. | HR | Before sending |
| 4 | Issue the letter to all affected employees, providing a clear explanation and offering a Q&A session. | HR | Upon preparation |
| 5 | Address employee inquiries, concerns, and ensure transparency throughout the pay freeze period. | HR and Management | During the freeze |
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