City solicitor fails in claim for pay reduced during Covid

Tribunal: Claim dismissed

A City solicitor who agreed to lower wages during lockdown has failed in his claim for full pay for his last month after handing in his notice.

Employment Judge Burns in London found that Hilesh Chavda did not have a contractual right to a review of the reduction.

Mr Chavda was a senior associate and head of private client at 10-partner City firm DKLM on a salary of £75,000.

According to the tribunal ruling, in mid-March managing partner Jeremy Kleinfeld told staff that their pay would be cut 80% from the start of April – to be reviewed at the end of June – because of the impact of Covid.

Mr Chavda agreed to accept a 40% reduction, initially only for April. At the start of May, Mr Kleinfeld told him that “the existing arrangement will continue for the time being and will be constantly reviewed”.

Mr Chavda noted in reply that his salary would be 40% less in May and “the reduction is to be reviewed by the end of the month for June”.

On 2 June, he resigned with effect from 1 July. After this was accepted by Mr Kleinfeld, Mr Chavda asked for confirmation that he would be paid his full salary for June.

The firm’s practice manager said his resignation came before the review, but that the firm’s income and his billings for May meant his salary would have to remain at 60%. Mr Chavda protested, saying he had not agreed to a reduction beyond May.

As a gesture of goodwill, the firm offered an ex gratia payment equal to 20% of his salary for June, which was paid even though the solicitor refused to accept it. It also paid his 12 untaken days of holiday for 2020 at 100% for the days apportioned to March, 60% for April and May, and 80% for June.

Mr Chavda brought his claim for approaching £2,000, for the 20% of salary and holiday pay in June which was not paid.

Judge Burns said the May emails were at odds as to whether the review of the pay for June had to take place before the end of May.

“However that is an insignificant difference, because whether the review was to take place before the end of May or not, both emails have it in common that the reduction to 60% of pay would remain in force unless and until the reduction was reviewed upwards.”

He found that the claimant did not have a contractual or other right to a review of the June pay before the end of May.

“It is clear that any review of pay going forward would wish to consider the whole month’s results. Furthermore, the previous reduction of the April and May pay had been agreed/reviewed during the first weeks of those months and not by the end of the previous months.

“I find it was not open to the claimant to secure one month’s full ie unreduced pay for June by giving notice before a review which was the only way in which (in theory) the pay for June could have been restored to 100% but which in fact, had it occurred in the first few days of June as per the previous precedent, would have left the pay at the 60% level at best.”

Mr Chavda is now a partner at Spencer West.

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