What are my obligations to an employee who I'm converting from full-time to part-time?

I don't have the funding to continue to pay this employee for forty hours every week. But, we can accomplish all of the administrative functions in twenty hours a week.

The best way to do this is to simply be prepared for the meeting and then to be straightforward but in a kindly fashion.

Being prepared means having the reason for the cutback clearly defined and that you are ready to articulate the reason with authority. If the company is spending like a "drunken sailor" in other ways, cutting someone's time/pay may be harder to defend than if you have been reducing expenses steadily in other ways.

Take a careful look at all aspects of how this cutback in hours will affect the employee. For example, will this cutback in hours mean that the person is not responsible for precisely the same work load? Will some aspects of the job change--be lessened in volume or level of responsibility?

Look through the person's job description and figure out ahead of time what aspects of the job may be off loaded or otherwise accounted for when the hours are cut back. The worker is sure to have questions about how certain things that she does will now be done and by whom. You need to have answers.

You mentioned that the position is administrative, so I am assuming that it is non-exempt (paid by the hour and subject to overtime rules under the Fair Labor Standards Act). So, the simplest thing pay-wise for you to do is to calculate the hourly rate and pay the person for 20 hours a week.

The question you might ask yourself, however, is whether that is 100 percent fair. For instance, is it really 20 hours a week right away or could you ratchet it down from 40 hours to 30 hours (say for a month or so) and then go to the 25 hours a week and then 20.

This would give the worker time to adjust. Or can you pay a bit more for the 20 hours than simply the straight hourly rate to ensure that the worker does not quit and leave you needing to hire and train someone else? It can be harder to find dependable part-time workers than full-time workers.

Also, I assume that the person will receive a reduced amount of vacation and sick time and only be paid for half a day on paid holidays. Does this change mean that the person will lose other benefits (health insurance, etc.)? If so, that may be a worse blow than the reduced salary. Know the answers to how the company wants to handle this.

Be ready and receptive to discuss the matters that will concern the employee. Being prepared shows that you really have thought this matter through and that you care about the worker.