Can an Employer Reduce Your Salary in Ontario?

Can an employer lower your pay? Can your boss give you a pay decrease? Yes, your employer can reduce your salary in Ontario. The law allows employers to make minor changes to your terms of employment, including slightly reducing your salary. Your employer can also make changes to your hours, job duties, and other terms. Your employer should provide you with sufficient advance notice before implementing the changes.

Wage reduction in Ontario is legal, but if your employer made unilateral changes without giving you adequate notice of the impending changes, this could result in a constructive dismissal. If your employer makes a significant change to your employment terms or asks you to accept such changes, you are under no obligation to consent and you should consult an employment lawyer in Mississauga before you do so.

Small vs Large Wage Reductions

When does a unilateral salary reduction imposed by an employer amounts to constructive dismissal? While there is no firm guideline, if your pay has been reduced by more than 10%, you may have been constructively dismissed and should consult an employment lawyer.

What To Do After A Reduction Of Your Salary

You have several options when your employer changes your job or reduces your pay leading to a possible constructive dismissal:

  • You can accept the changes.
  • You can reject the new terms and request the employer to restore the previous employment terms.
  • You can consult a lawyer about whether you have been constructively dismissed to discuss whether you should pursue a constructive dismissal claim.

When A Pay Cut Amounts to Constructive Dismissal

If an employer makes significant unilateral changes to an employment contract, the employee might feel like they have no other option but to quit. A constructive dismissal can also occur if you are demoted or if an employer behaves in a manner that suggests that they are no longer bound by the terms of the employment agreement. These behaviours include subjecting an employee to abusive treatment, harassing the employees, and taking no action when other parties harass the employee in the workplace.

Constructive dismissal can occur if your employer makes changes that cause you a significant income loss. Common examples include:

  • Changing your commission plan
  • Removing your bonuses
  • Reducing your work hours
  • Adjusting your sales territory
  • Loss of status, demotion or reduction in responsibility
  • Change your commute to an unreasonable time

It is important to note that slight changes to your pay may not be sufficient grounds to file a constructive dismissal claim.  It is important to consult your lawyer to advise you whether you should pursue a constructive dismissal claim.

Whether You Should Agree To A Pay Cut

When you learn about an impending pay cut, all manner of questions will run through your mind. Can my employer change my job and reduce my pay? Can an employer legally reduce your pay in Canada? Should you agree to a pay cut? You can accept a lower pay provided your employer first seeks your consent, and you agree. For example, you can arrange with your employer to change your terms from full-time to part-time and agree on a new payment structure. However, if you do not consent to the pay cut or other changes in your employment contract, you should take legal action. If you remain silent, a court might assume or conclude that you agreed to the changes, making it hard to pursue a constructive dismissal claim.

How You Should Respond To A Pay Cut

In the face of a pay cut or other changes to your employment contract, the steps you take will determine the outcome of your case. You should:

  • Remain calm and professional.
  • Record the details of your pay cut in writing
  • Object to the pay reduction in writing
  • Contact an employment lawyer

Seeking legal advice is crucial because your lawyer will help you determine if you should pursue a constructive dismissal claim. If you fail to respond to your employer after a pay cut, you could lose out on your rights/entitlements.

Contact Us Today

At Walter Law Group, we have handled many cases of constructive dismissal, wrongful dismissal, and harassment in the workplace. Contact us today to book a consultation.