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In Ontario, the question of whether an employer can reduce your salary is a nuanced one. While employers do have some wiggle room to adjust pay within certain situations, significant reductions without your consent can lead to complex legal challenges. It’s crucial to understand your rights in these scenarios.
To examine the consequences of a salary cut by your employer, we spoke with Lior Samfiru, an employment lawyer and national co-managing partner at Samfiru Tumarkin LLP in Toronto, Canada’s leading firm specializing in non-unionized employee-side workplace law.
Can my employer reduce my pay in Ontario?
Simply put, no.
Your employer does not have the authority to significantly cut your pay without your consent. Minor salary reductions may be allowed, but these should not be detrimental to you as an employee. For example, if your employer imposes a pay cut of 15 per cent or more, it could be considered constructive dismissal.
What is constructive dismissal?
According to Samfiru, constructive dismissal occurs when an employer makes major changes to an employee’s job without their consent.
“The company is effectively ending the agreement they had with the employee about the working relationship,” he said. “You can interpret that as termination without cause, and resign.”
Common forms of constructive dismissal
Signs can vary, but some of the most common forms include:
- Significant cut in pay or commission.
- A demotion.
- Major changes to job responsibilities
- Changes in work location that impact the employee.
- A temporary layoff.
- Suspension without pay.
- Forced changes in work hours or shifts.
- Harassment or a toxic work environment.
In cases like these, you may have the right to pursue full severance, which could amount to as much as 24 months’ pay.
“An employer can’t demote you or strip away your compensation, your position, or your responsibilities," Samfiru said. "Consider if a VP was demoted to a part-time parking attendant – that’s clearly unreasonable.”
“Or imagine a manager whose team is suddenly reassigned, leaving them with significantly reduced responsibilities. These situations can be seen as constructive dismissal, and you don’t have to wait for a severance package offer. You can exercise your right to a fair severance due to these changes.”
What happens if your employer sells the company?
The same rules apply when your employer sells the company – the buyer can’t make sweeping changes to your role or compensation. If they propose a reduced salary or another significant adjustment, you would likely be entitled to full severance pay from the original owner who sold the business.
Your employer can make minor adjustments to your role or responsibilities, as long as they don’t substantially change your employment. Slight changes to your schedule, tasks, or reporting relationships may not constitute constructive dismissal, nor would any changes you and your employer mutually agree to.
Steps to take before quitting due to constructive dismissal
Before making any decisions about quitting your job due to changes in your employment terms, it’s essential to seek legal advice first. Start by using Samfiru Tumarkin LLP’s Pocket Employment Lawyer to gain a clear understanding of your employee rights, and check out their Ontario severance pay calculator to see what compensation you might be owed. Then, consult with an experienced employment lawyer at Samfiru Tumarkin LLP, who will actively guide you through your options and the implications of resigning.
Document all interactions and changes, and communicate your concerns to your employer as these steps are crucial in building a strong case for a constructive dismissal claim.
“Your employment terms aren’t just suggestions – they are binding commitments from your employer,” Samfiru emphasized. ”If they try to force significant changes to your job, remember you are not powerless; you have the right to push back, to refuse.”
He continued, “Accepting unwanted changes sets a dangerous precedent, giving your employer permission to make further changes at will. If they ignore your refusal, this could be grounds for a constructive dismissal. But don’t quit right away. First speak to me, and I can help you get the severance you rightfully deserve.”
In situations where your job is at stake due to significant changes in pay or other employment terms, understanding your rights is paramount. A firm like Samfiru Tumarkin LLP specializes in navigating these claims in Ontario, ensuring that non-unionized employees are well-informed and properly compensated for any wrongful actions by their employer. Remember, when it comes to protecting your rights as an employee, proactive and informed action is key.
Contact employment lawyer Lior Samfiru, national co-managing partner at Samfiru Tumarkin LLP, to get the advice and compensation you need by calling 1-855-821-5900, emailing Ask@EmploymentLawyer.ca or filling out an online contact form.
His law firm represents non-unionized employees in Ontario, Alberta and B.C. Discover your employment rights by watching Lior on Ask a Lawyer every Wednesday at 9:30 p.m. on CP24.
