Ontario Court Win: Executive Awarded Over $330,000 After Demotion And Pay Cut

Samfiru Tumarkin LLP secured more than $330,000 for an Ontario executive whose employer tried to demote her and cut her salary by $90,000 as she returned from maternity leave.

Joanna McFarlane had earned two promotions while helping advertising company King Ursa through a difficult period. But after extending her leave at the company’s request, she was presented with a new agreement that stripped away her executive vice-president title and cut her salary by 30%.

Joanna refused to sign. Employment lawyer Fiona Martyn and other member of our team represented her in the Ontario Superior Court of Justice. The court found that the company’s actions amounted to a dismissal and awarded compensation based on 12 months of pay, plus $40,000 for how she was treated.

The Employer Said It Needed To Cut Costs

King Ursa was struggling financially. Its senior leaders had reduced their own compensation and expected Joanna to accept a lower salary too.

The company told her she was still needed and valued. Its CEO even described the proposed title as a promotion because it included the word “partner.”

The judge did not accept that explanation. The proposed title was the same one Joanna had held before her promotion to executive vice-president.

A New Baby, A House Purchase And A $90,000 Pay Cut

For Joanna, the new agreement affected more than her job title. She had a new baby and was purchasing a house. She now faced losing almost a third of her salary and the senior position she had worked to earn.

The court found that the agreement put pressure on her to accept the changes or leave.

The company’s financial problems did not remove its responsibilities to her. If it could no longer afford to employ her on the existing terms, it still had to provide proper notice or pay.

The judge found that Joanna had been constructively dismissed. The company had changed her job so significantly that the law treated it as a dismissal, even though she was the one who said she would not return.

Our Team Secured 12 Months Of Compensation

Joanna had worked at King Ursa for approximately four years. But the court looked beyond her years of service when deciding how much notice she should have received.

Her senior position and difficulty finding comparable work were important. She had risen quickly through the company and brought valuable expertise in marketing analytics. Finding another role at the same level was not straightforward.

Joanna found consulting work after leaving. King Ursa did not provide evidence showing that she could have found a similar permanent position if she had tried harder.

The court awarded compensation based on 12 months, totalling $317,274.36 before deducting her earnings from contract work. After that deduction, her dismissal award was $290,615.81.

An Extra $40,000 For How She Was Treated

The judge recognized the company’s need to reduce costs. But reducing Joanna’s title did not save it money.

The demotion undermined the professional standing she had built through her work. Even if the wording came from carelessly reusing an old employment agreement, the company was responsible for its effect on her.

The court awarded an additional $40,000 in moral damages — compensation for the harm caused by the employer’s insensitive handling of the situation.

Read the full court decision: McFarlane v. King Ursa Inc., 2025 ONSC 3553.

What This Means For You

• A major pay cut or demotion can trigger severance rights. You do not always need to hear “you’re fired” to have a dismissal claim.
• Financial trouble does not give an employer a free pass. A company’s need to save money does not automatically allow it to impose major changes to your job.
• A few years of service can still lead to significant severance. Your position and the availability of similar work also matter. Joanna received 12 months of compensation after approximately four years with the company.
• Get advice before signing a new agreement or resigning. How you respond to a proposed change can affect your rights. Save the agreement and related emails, and have an employment lawyer review them promptly.

A Lesson For Employers

Changes to compensation and job titles need careful handling, even when a business is struggling. Our employment lawyers can assess proposed changes and help businesses understand their obligations before presenting a new agreement.

Another Ontario client win: See how our team helped an Ontario road boss recover more than $320,000 in a constructive dismissal case.

Facing A Demotion Or Pay Cut In Ontario?

Before you sign, always check first. You may have options beyond accepting the change or quitting without compensation.

Our Toronto executive severance lawyers and Ontario employment law team can review what your employer is proposing and explain whether you may be owed executive severance pay. Your severance could be as much as 24 months’ pay.

Many employment disputes can be resolved without going to court. When an employer refuses to recognize an employee’s rights, Joanna’s case shows the experience our team brings to pursuing a fair result.