Can My Employer Demote Me in Ontario?

A demotion at work can feel confusing, stressful, and even humiliating. Many people in Ontario aren’t sure whether a demotion is legal — or if it counts as a type of termination.

Here’s the reality: your employer can only demote you in very limited situations.
In many cases, a demotion is a constructive dismissal, which means you can get full severance pay.

This guide explains when a demotion is legal, when it crosses the line, and what steps you should take before agreeing to anything.

What Is a Demotion in Ontario?

A demotion happens when your employer makes a significant change to your role, such as:

• Lowering your job title
• Reducing your responsibilities
• Removing your leadership or decision-making duties
• Changing who you report to
• Reducing your salary, hours, or commissions
• Moving you to a less senior or less visible position

Can an Employer Legally Demote You in Ontario?

Yes — but only in very limited situations.

An employer in Ontario may be able to demote you if:

• Your employment contract clearly states that a demotion can occur
• You agreed to certain conditions (e.g., probation after a promotion)
• The change is minor and does not affect pay, status, or key responsibilities

Outside of these narrow situations, most demotions are not legal.
They are a major change to your employment, which amounts to constructive dismissal.

When a Demotion Becomes Constructive Dismissal in Ontario

Under Ontario law, a demotion is a constructive dismissal if your employer makes a fundamental change to your job without your consent.

A demotion may qualify as constructive dismissal if it involves:

• A meaningful salary or hours reduction
• losing management or leadership duties
• A title change that lowers your status in the company
• A move that harms future promotion or earning potential
• A humiliating or punitive reassignment
• A new reporting structure that diminishes authority
• A change that causes embarrassment, stigma, or reputational harm

If this happens, you may be legally entitled to quit and claim severance, just as if you were fired.

Can I Be Demoted Without Warning in Ontario?

In most situations, no.

A sudden, unexpected demotion is one of the strongest signs of constructive dismissal.
Employers are generally expected to:

• Provide clear expectations
• Communicate performance issues
• Offer reasonable opportunities to improve
• Act in good faith

Is a Pay Cut Considered a Demotion?

Yes.
In Ontario, any significant reduction in pay is a major change to the employment relationship.

This includes:

• Salary cuts
• Loss of bonuses or commissions
• Reduced hours
• Taking away a car allowance or similar benefits

Can an Employer Change Your Job Duties in Ontario?

Your employer can make small, temporary, or reasonable adjustments to your duties.
But they can’t:

• Gut your responsibilities
• Move you to a junior role
• Assign you work far below your skill or seniority level
• Remove your authority or leadership role

When job duties change significantly, it is a demotion in practice, even if your title stays the same.

Can You Be Demoted for Poor Performance in Ontario?

Yes — but only in restricted cases.

A demotion may be legal if:

• There is documentation of poor performance
• You were warned and given time to improve
• The employer followed a fair, consistent process
• The change aligns with your employment contract

Demotion After Medical Leave, Disability, or Accommodation

In Ontario, it is illegal for an employer to demote you because of:

• A medical condition
• A disability in Ontario
• A workplace injury
• Time off for treatment or recovery
• A need for accommodation

This may violate the Human Rights Code, which can lead to additional compensation.

Demotions as Punishment or Reprisal

Your employer can’t demote you as retaliation for:

• Reporting unsafe work
• Asking about your rights
• Taking maternity or parental leave
• Filing a harassment or discrimination complaint
• Requesting accommodation
• Participating in Ministry of Labour investigations

Demotion During Restructuring or Downsizing

Even during a restructure, your employer must follow the law.

A demotion connected to “restructuring” may still be constructive dismissal if:

• Your pay is reduced
• Your seniority is affected
• Your responsibilities change materially
• Your title gets a downgrade
• You’re moved into a less meaningful role

A company restructuring in Ontario does not give employers a blank cheque to alter your job.

Should You Accept a Demotion?

It depends on your situation.
Before accepting or rejecting a demotion:

✔ Don’t quit

Quitting too quickly may limit your severance options.

✔ Ask for details in writing

Clarify the new title, duties, pay, and reporting structure.

✔ Respond in writing

If you disagree, politely state that you do not accept the change.
This protects your legal position.

✔ Speak with an employment lawyer

A short conversation can determine whether the demotion is legal and what your severance rights may be.

How Much Severance Are You Owed After a Demotion?

If your demotion qualifies as constructive dismissal, you may be owed:

• Termination pay Ontario
• Severance pay Ontario
• Benefits continuation
• Bonus, commission, or stock compensation
• Potential human rights damages

Many Ontarians receive significantly more than the minimums set out in the Employment Standards Act.

When to Contact an Employment Lawyer

If you’ve been:

• Demoted without warning
• Had your pay reduced
• Moved to a junior role
• Stripped of responsibilities
• Targeted, pressured, or punished
• Demoted after medical leave
• Told to “accept it or resign”

…you should speak with an employment lawyer in Ontario immediately.

You may be entitled to substantial severance and additional compensation.