Q. We conduct yearly
A. Yes, you can decrease the employee's salary prospectively, provided that the employee does not have an employment contract and is not subject to a collective-bargaining agreement that says otherwise.
Of course, reducing salary poses a significant employee-relations issue. Think carefully before taking that step. You may want to consider not giving the employee a raise or bonus instead of cutting his or her salary.
Also, you should make sure you make these decisions consistently and take the same action for all employees with comparable performance.
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