Question: Our managing director has unilaterally implemented a 10% pay reduction for all staff and managers without seeking consent from our employees. He says he has taken legal advice and is entitled to take this action. Is he correct?

Rachel Penny, from Arthur Cox solicitors, replies:

It is almost certain that cutting pay in this unilateral fashion will indeed amount to a breach of contract, but I would need to see the contracts of employment to be sure.

Assuming, however, that your contracts of employment do not give the managing director the ability to cut pay in this way, you are correct that you need each employee to agree to the pay cut on an individual basis.

An alternative is if you recognise a trade union for pay bargaining purposes, in which case pay cuts are negotiated and agreed on a collective basis, much like the high profile examples in motor industry.

The question is, now that your managing director has done this, what can or should you do about it?

I don't know what industry you operate in, but these are extraordinary economic times and many employers are finding (rightly or wrongly) that they can “get away with” a lot more than perhaps was the case a year or two ago.

What action you should take now really depends on your attitude to risk.

Some employers would do nothing and wait and see what the employees' reaction is, others would try and backtrack and obtain individual consent.

There is no question that your managing director's actions give employees a number of potential claims, not least of which is constructive and unfair dismissal — but are employees going to walk out of a job when there aren't many for them to walk into?

Possibly a bigger risk is that employees work under protest or “stand and sue” as it is sometimes known.

This is where the employee continues to work but makes clear (usually in writing) that he or she is unhappy with the pay cut and does not accept the employer's unilateral actions.

The employee can then issue an unlawful deduction from wages claim and if successful, the employer will be ordered to pay the shortfall.

If an employee says nothing, accepts the reduced salary and continues to work then there is every possibility that after a few months of silence, he or she will be considered as having impliedly agreed to the pay cut.

Question: My turnover is holding up well but customers are taking longer to pay and it’s getting harder to pay tax bills on time. Is there any point asking the taxman for help?

David Hill, of David A Hill Business and Tax Consulting, replies:

Despite the taxman’s unenviable reputation there is now every reason to hope for sympathy with a request for additional time to pay tax bills — as long as you ask before the tax is due.

HM Revenue & Customs (HMRC) launched its Business Payment Support Service (BPSS) in late 2008 to help businesses deal with short-term difficulties.

HMRC asks you to ring 0845 302 1435.

In exchange for basic information about your business HMRC undertakes to give most callers a decision within ten minutes, and the official emphasis is very much on helping businesses in difficult times so the majority of decisions will be positive — in fact 110,000 agreements had been made by mid-April 2009.

You can find out more at http://www.hmrc.gov.uk/budget2009/bus-payment-support-582.pdf

As is always the case when speaking to HMRC it is advisable to keep a detailed note of your conversation, including time, date and the name of the officer to whom you have spoken.

The agreement will ensure that no surcharges will arise for late payment, although interest will be charged.

Following the Budget, HMRC is also prepared to factor estimated losses and their effect on the overall tax liability into the revised timetable for payment.

Although HMRC is stopping short of immediately repaying tax already paid in such circumstances this is nonetheless an important and very welcome concession.

Sadly the BPSS is not available if you are already in arrears with HMRC, in which case I recommend that you discuss matters urgently with your accountant/advisor and draw up a detailed and, above all, realistic plan to clear the arrears.

Question: My business trades both locally, nationally and internationally and we rely on targeted marketing campaigns throughout the year to ensure sales. We're under pressure to reduce this spend, what way can we ensure this spend continues to deliver?

Faye Cousins, senior marketing and business development manager, BDO Stoy Hayward, replies:

Now more than ever marketing is a key sales driver for your company and those making wholesale cuts in this area may find themselves unable to attract new customers, existing just to service an existing (and potentially dwindling) group of clients. Historically marketing budgets have not been subjected to effective cost benefit analysis.

Large sponsorship proposals can often exclude key demographic targets within a marketing plan and can be more to do with prestige than delivering sales.

In addition, expensive advertising is often unsuccessful unless it is accompanied by effective and targeted on-the-ground marketing efforts.

The most important consideration in any marketing spend is how to raise the profile of the company while also winning new work and delivering sales.

If the spend doesn't tick all of these boxes then it's likely to be ineffective.

The internet also offers a panacea of new options at a relatively low cost and when we exit the current downturn I'm very sure that new innovations in online and viral marketing such as blogging, twitter, podcasts and RSS feeds will have emerged into the mainstream.

The challenge for any business now is to manage costs in other parts of the business to ensure that all marketing activities remain integrated and tied to the overall strategy of the business.