Ask HN: Should I sign a pay cut agreement?

Nope, this would be a really bad approach. Let's leave aside the issue of _getting_ debt - banks are likely to be reluctant to offer debt to a business that is strugelling.

Taking on debt though to pay for staff you can't afford from revenue is only useful if the issue is cash-flow related. If the issue is income related then taking in debt is bad for the business, and bad for employers.

If the salary bill is too high then it has to come down. One way is to shed jobs. Those affected are affected 100%. Those unaffected are unaffected 100%.

The other way is salary cuts. Everyone is affected 90%. Which is better depends on which side you are on.

Some employees want to stay enough that they'll take 90%. Others will jump ship. If you have a job to go to, and you want to go, then go. That will free up 100% of your salary for the others.

Of course they know what happens if you don't sign. They're not morons. I'm surprised you even asked. The scenarios are obvious;

A) business goes under. All employees get nothing. Or B) another round of layoffs. (but this means severances, so may not even be possible) or C) enough people sign to lower the salary bill enough, but not you - you get to keep 100%. (this may not be ideal for your future raises etc) D) you quit.

I don't know your company, or your bosses, so I can't speak to their motives. But the fact they are asking for this suggests that the margin between success and failure is narrow. Like 10% narrow. They are offering you the opportunity to share pain, rather than cut more jobs.

At this point the ball is in your collective court. Feel free to leave. You might just be doing everyone a favor.

Think of it from the employer's perspective, if they're coming to the team with this proposal, it's likely they see a difficult financial Outlook. (Either that, or the management feels it's time for a culture reset)

I can only speak for myself, but I don't think many people enjoy the prospect of having to do a layoff. But sometimes it comes down to that or winding down the company, to me, in such cases, the choice is obvious.

pay reductions, are of course suboptimal, but they remove the need to spend a whole lot of time and money recruiting to rebuild a team once things turn around, so it's a sensible play from the employer perspective.

If it were me, I'd consider if I was motivated enough by the work independent of financial compensation to want to stay part of the organization, if so I'd consider taking the pay decrease but I would definitely push to for some future recognition that I took the risk for the good of the team. Ideally in writing.

Given that the country shut down with 3 days notice, everyone was in the same boat. Banks offered the usual payment holidays and so on.

Certainly a lot of companies did as you suggest, and simply let everyone go. I'm not sure that's better than 50%. Clearly all our employees were welcome to quit, and since none of them did, I guess they preferred 50% to 0%.

I'll be sure to mention to them next time that they're welcome to take 0% instead.

Loans were not an option given that the banks were closed. (And given that our appetite for large loans is zero.)

>> They should get a bonus.. you did.

Did I? news to me :) I was on 50% like everyone else, and I was made whole last. As it happens we issued 2 bonus' the following year. So yeah we share profits.

Obviously there were different approaches to dealing with unprecedented events. I'm not looking for employer of the year, but on the other hand I don't like firing people unnecessarily.