Category: Employment Law

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.

In 2023, many large tech companies have announced mass terminations and layoffs in Canada due to what they term a slowdown in the sector. For example, Salesforce announced that it would cut 10% of its employees and even close some of its offices. In a letter sent to employees, Salesforce stated that the rapid pandemic hiring had left it with too many staff. It is not clear how many employees will be affected by the mass layoffs. However, Salesforce offices in Toronto, Halifax, and Vancouver have approximately 1800 Canadian workers.

Similarly, Amazon also announced a massive workforce reduction that will affect around 18,000 jobs. This layoff affected Canadian workers at Amazon. Other renowned tech companies that have announced layoffs include Meta/Facebook, Microsoft, and Twitter. Salesforce promised to give generous termination/severance packages to the employees affected by the restructuring. However, should employees in Canada assume that the packages are fair based on legal standards? Workers should not assume that the severance package their employer is offering them is what they are entitled to; they could be worth much more.

Several factors are triggering the mass layoffs in Canada, including rising interest rates, inflation, changing consumer habits, and supply chain issues. If you have been affected by the recent layoffs in Canada, you are probably wondering, are layoffs legal in Canada? What steps should you take after receiving a layoff notice? If you are a non-unionized worker who has lost their job due to corporate restructuring or downsizing, you need an employment lawyer in Mississauga who understands Canadian layoff laws to help you know your rights.

When You Lose Your Job

You are likely entitled to a severance package if you are a non-unionized employee and you are fired without cause. You could also be entitled to compensation if you are incorrectly let go for cause. When calculating your reasonable notice period, several factors are considered:

• Your age
• The position you held at the company
• How long you have worked in the company
• Your ability to find new employment

The older you are and the longer you have worked, the longer your period of reasonable notice. High-level, senior, or unique employees are also entitled to a higher severance package. With the proper legal representation, you can receive a severance package that greatly exceeds the statutory minimumsand based on your total compensation.

Your total compensation is determined based on all the benefits and compensation you earned during employment. This includes your commissions, benefits, regular bonuses, allowances, profit-sharing payments, incentive programs, and other consistent or tangible payments beyond your salary. Many severance packages are deficient in these areas since employers often discount or discontinue some elements of your total compensation in an unfair way.

Understanding the Employment Standards Legislation

Any layoff or restructuring that leads to lost jobs qualifies as a termination without cause. When that occurs, your employer must comply with the Employment Standards Act (ESA) or for federally regulated industries, the Canada Labour Code. These statutes define the minimum period of notice of termination that employers should give their workers and requires employers to pay their workers additional severance pay in some cases. The applicable amounts are determined based on tenure and could go up to 8 weeks’ notice or pay, plus applicable severance pay, if entitled.

Your Employment Contract Can Affect Your Severance Pay

Some companies make workers sign employment contracts that limit their entitlement to a severance package. If you signed such a contract, the court would only rely on it if it is valid and in compliance with the ESA. If your employer is relying on any document you signed to limit the severance, you should ensure that your lawyer looks at the document.. Many contracts are not valid contracts and will not limit your entitlement to reasonable notice.

Your Severance Package Doesn’t Have to Match That of Your Co-workers

Your severance package will be calculated based on the compensation and benefits you have earned during your employment. Therefore, just because you and your co-workers lost employment together as part of the same mass layoff doesn’t mean that you will have equal severance packages. Your severance package will also depend on your individual circumstances, like tenure, age and position. It will not have anything to do with what your co-workers have agreed to or received.

Steps to Take If You Were Recently Laid Off

You should take the following steps:

• Take time to discuss the severance package with a lawyer to help you make an informed decision
• Do not agree or sign anything unless you are certain
• If need be, do not hesitate to ask for an extension of time so you can speak with a lawyer.

Even if the offer seems lucrative, do not assume that what the company has offered is what you are entitled to.

Our Lawyers Can Help

If you have lost your job as part of a layoff in Canada, our lawyers at Walter Law Group can help you examine your severance package to determine if it is adequate. We have helped thousands of employees to pursue their rights. Contact us today. We will work hard to ensure you obtain the compensation you deserve.

If you are terminated without cause, your employer may owe you termination and severance pay, under the Employee Standards Act, 2000 (ESA).  So, does it mean that termination pay is the same as severance pay? While these two payments are often perceived as the same, they are distinct. Technically, these concepts are used together or interchangeably to reference a type of compensation employers in Ontario owe terminated employees.  This article by Walter Law Group focuses on severance pay vs. termination pay in Ontario under the ESA.  If you work for a federally regulated industry (such as banks, airlines, telecommunications companies or trucking companies), your statutory entitlements are different under the Canada Labour Code.

What’s Considered Termination Pay in Ontario?

What is termination pay, and who is eligible for termination pay? This is the payment your employer must give you in lieu of issuing a notice of your employment termination. Note that the termination pay Ontario is stipulated in the ESA and is the minimum amount you are entitled to.

You may have a written employment contract that says how much notice you should be given upon termination. That means it sets out the amount of compensation you should be given in lieu of that notice.  Your contract must provide that you will be paid at least the amounts provided for by the ESA, and if your employment contract says you will be paid in lieu of notice below the ESA requirements, then the contract is considered void, and ESA requirements will set out the minimum of what your employer owes you.

Keep in mind that the notice period under the ESA differs based on the length of time you have worked for the employer.  For instance, if you have worked for five years or more but fewer than six years, the required notice should be at least 5 weeks. That means your employer should provide a lump sum amount equal to the specific amount you would have been entitled to get during that period of five weeks if the notice had been given on time.

Sometimes, it can be challenging to calculate the amount of termination pay your employer owes you or determine if it has paid below the ESA requirements. Call us at Walter Law Group to make sure you have been paid the correct amount.

In addition to the ESA’s requirements regarding minimum notice periods, you may be entitled to additional notice under the common law.  Note that common law notice is when a court of law can offer an extended notice period above the stipulated ESA minimum requirements. If you need help to understand how much common law notice you are eligible for, call us at Walter Law Group.

How to Calculate Termination Pay in Ontario

Your termination pay in lieu of notice under the ESA will be calculated as follows:

• If you have worked more than 3 months up to a year – one week;
• If you have worked more than a year but less than three years – two weeks;
• After three years, it is one week per entire year of service, up to a maximum of eight weeks.

You are probably wondering, how much termination pay am I entitled to in Ontario? Here are two examples to help you understand how the statutory notice is usually calculated.

Example 1: Termination Pay for a Regular Work Week

Maya worked 35 hours weekly, and her pay was $18 an hour. She also received 4% vacation pay. Because Maya worked for more than three years but less than 4 years, she is eligible for 3 weeks’ pay in lieu of her notice. Here is how termination pay is calculated.

Maya’s regular wages

$18 per hour x 35 hours a week is equivalent to $630 per week.

Her termination pay is $630 x 3 weeks. This is equivalent to $1890.

Then her vacation pay on her termination pay is 4% x $1890, which is equivalent to $75.60.

Finally, Maya’s vacation pay should be added to her termination pay.

That means $75.70 + $1890 which is equivalent to $1965.60.

Maya is entitled to a gross payment (before tax deductions) of $1965.60. Her employer must also ensure continued coverage for all benefits and pension plans applicable to her for 3 weeks.

Example 2: Termination Pay for Irregular Work Week

Samuel has worked at a nursing home for more than four years. He works each week, but the weekly hours varies. When your hours vary, the ESA provides that your employer use the average weekly pay over the 12 weeks prior to your termination.  Samuel’s pay rate is $19 per hour, and he gets a 6% vacation pay. Samuel’s employer eliminated his position and failed to give him a notice of termination. He was ill and off work for two out of the 12 weeks immediately preceding the day his employer terminated his employment. Samuel earned $1,850 in the 12 weeks before the day his employment was terminated.

Samuel is entitled to 4 weeks termination pay based on his four years of service.

His average weekly earnings are calculated as follows:

$1,850 for 10 weeks worked out of the 12 weeks before his termination (Samuel was off sick for two weeks, so these two weeks are not included in the average earnings calculation). So he earned $185 weekly.

Samuel’s termination pay is calculated as follows:

$185 x 4 weeks = $740.

His vacation pay on termination is as follows.

6% of $740, which is equivalent to $44.40.

To determine Samuel’s total pay is $740.00 + $44.40 = $784.40.

Samuel is entitled to a gross payment (before tax deductions) of $784.40. His employer must also ensure coverage for the pension plans and benefits he is entitled to for four weeks.

What’s Considered Severance Pay in Ontario?

Severance pay under the ESA is the amount of compensation that you, an employee, receive in addition to termination pay, if you are eligible. It’s intended to compensate you for your years of service with the employer.

You are probably wondering, is severance pay mandatory in Ontario? How many weeks severance in Ontario, and who is entitled to severance pay?

To be eligible for severance pay under the ESA, you must have worked for your employer for more than 5 years, AND the employer must have a payroll (meaning its pay to all of its employees) of over $2.5 million per year.  If these conditions are met, the eligible employee is owed a week of severance pay for each year of service, up to 26 weeks.

In addition to Termination and Severance pay under the ESA you may be entitled to additional notice under the common law.  Note that common law notice is when a court of law can offer an extended notice period above the stipulated ESA minimum requirements. If you need help to understand how much common law notice you are eligible for, call us at Walter Law Group.

Often, determining whether the severance package you have been offered includes the proper amounts of termination and severance pay as well as common law reasonable notice is a complex process.  If you want your severance package reviewed to ensure you are receiving fair and reasonable compensation on the loss of your job, call us at Walter Law Group.

How is Severance Pay in Ontario Calculated?

To determine the amount of severance pay an employee is entitled to, multiply the worker’s regular wages for the standard week of work by the number of years completed. To determine the severance pay for an incomplete year, multiply the worker’s regular wages by the number of the completed months, then divide by 12.

How much severance pay am I entitled to? This is a common question when you lose your job. Here’s a simple illustration of a severance pay calculation:

Kevin has been employed at XYZ Inc. for 6 years and 6 months and regularly dedicates 40 hours a week to his work, earning $18.50 hourly.  His employer currently has a payroll higher than $2.5 million. Unfortunately, XYZ Inc. has decided to terminate his employment, giving Kevin eight weeks’ notice of employment termination. Kevin will be working up to the end of this notice period for a total service time of 6 years, 8 months. Here’s how much severance pay Kevin is entitled to, according to the ESA.

Kevin worked 6 years, 8 months.  He is entitled to one week per year of service, so take his completed years (6), plus the total number of full months in the incomplete year that Kevin worked at XYZ Inc. and divide it by 12 (8/12 = 0.66).  Kevin’s entitlement is 6.66 weeks of severance pay.

Take Kevin’s weekly wages. Since he works full time, he puts in 40 hours weekly.

So, 40 hours x $18.50 = $740.00

Now multiply Kevin’s weekly wages ($740.00) by 6.66.

So, $740.00 x 6.66 = $4,928.40.

This is the total gross amount Kevin is entitled to as severance pay.

How an Employment Lawyer Can Help You with Severance or Termination Pay in Ontario

So, how do you receive a fair severance package? As mentioned earlier, the process of calculating the amount of termination, severance pay and common law notice in Ontario is complex.  However, with the help of an experienced employment lawyer, you can find out the total amount of termination and severance pay you are legally entitled to and how much additional common law notice you should receive.  Call us at Walter Law Group to find out more.