Can employers in Ontario cut a worker’s pay?

In Ontario, your employer can’t significantly reduce your salary or wages without your consent. If major changes are made to your job, it may be considered a constructive dismissal. You would be entitled to a full severance package as if you were fired without cause.

A company may have the ability cut your compensation by less than 15-20 per cent without permission. However, you should always speak to an experienced Ontario employment lawyer at Samfiru Tumarkin LLP before accepting any changes to your employment or before quitting your job.

LEARN MORE
• Forced to accept a pay cut in Ontario? Next steps
• Should I negotiate my own severance package in Ontario?

WATCH: Employment lawyer Lior Samfiru breaks down everything you need to know about changes to your job on an episode of the Employment Law Show.

What do I do if my employer directs me to take a pay cut, but I don’t want to?

Unless your employment contract in Ontario gives your employer the right to adjust your salary or commission, your boss can’t legally force you to accept a pay cut.

As soon as the company tells you that your wages are being reduced, make sure you:

• Get the terms of the reduction in writing
• Request a reasonable amount of time to consider the change before accepting

At any point during this process, you can object to your pay being slashed.

Clearly state in a letter, email, or text message to your employer that you don’t approve of the change to your salary or commission.

If you refuse the pay cut in writing, and your boss goes ahead with it anyway, contact Samfiru Tumarkin LLP.

Our experienced employment lawyers can inform you of your legal options based on the size of the reduction.

SEE ALSO
• Employment Law Show: Situations that trigger legal disputes
• Employment Law Show: Facts about the termination process

My employer is pressuring me to sign a new employment contract, what should I do?

If the employment contract you initially signed doesn’t give your employer the ability to adjust your pay, you could be asked to accept a new agreement that does give the company permission to make changes.

In the event that you are provided with a new employment contract, have it reviewed by a legal professional before signing anything. You don’t have to accept it immediately or a few days after receiving it.

In many cases, these agreements away key protections that would otherwise be available to non-unionized employees in Ontario.

An experienced employment lawyer at Samfiru Tumarkin LLP can review the contract and ensure that your workplace rights are properly protected.

LEARN MORE
• Starting a new job? Here’s how an employment contract could limit your rights
• ’60 days or more’: Is it an enforceable termination clause?
• Employment Law Show: 5 things to know about employment contracts

Validating a new agreement

In order for a new employment contract to be legally valid, employers must provide non-unionized workers in Canada with an additional “benefit”.

Potential benefits could include:

• A raise
• Extra vacation days
• More flexibility working remotely

If your company didn’t include an additional benefit in the new agreement, or you aren’t sure that one has been provided, don’t sign anything before contacting Samfiru Tumarkin LLP.

SEE ALSO
• Pay raises: Rights for employees in Ontario
• Vacation Pay in Ontario: Your Rights

My employer sold the business, can the new owner make changes to my pay?

If the new owner of the business decides to keep you on, it’s very likely that you will be asked to sign a new employment contract.

However, if you have a good reason for why you don’t want to accept the new agreement (i.e. reduced salary or commission), you can get full severance pay from the person or group that sold the company.

• Example: One of the firm’s clients, a construction worker in Mississauga, was told by her boss that he sold the business to a local competitor. Following the sale, she received a job offer from the new owner, but the employment contract required her to accept a 16 per cent cut in pay. Since the new agreement would significantly reduce her salary, the construction worker had a good reason for declining the offer and Samfiru Tumarkin LLP helped her secure full severance pay from her former employer.

Even without a good reason for turning down a job offer from the new owner, you can still get a severance package.

However, it’s very likely that you will only receive the minimum amount of compensation required under provincial or federal legislation.

LEARN MORE
• Sale of business in Ontario: Rights to severance
• Employee rights when a company closes

Can my employer punish me for refusing a cut in pay?

If you refuse a substantial reduction to your salary or commission, your employer can’t punish you by making negative changes to your job.

Major modifications, such as a demotion, relocation, or shorter shifts, are illegal in Ontario.

If you object to a pay cut, and significant adjustments are made to the terms of your employment shortly after, contact an experienced employment lawyer at Samfiru Tumarkin LLP.

We can confirm that you have been constructively dismissed, assess your legal options, and ensure you receive the compensation you are owed.

SEE ALSO
• Employment Law Show: Reprisals at work in Canada
• Employment Law Show: How to handle a bad boss
• Employment Law Show: What your employer legally can’t do

Can my employer fire me for refusing a cut in pay?

The short answer is yes. Your employer can fire you for refusing a pay cut.

This is called a termination without cause. Non-unionized employees in Ontario can be let go for any reason, as long as:

• They are provided full severance pay
• The reasons for their dismissal aren’t discriminatory

However, it’s very unlikely that your boss would be able to fire you for cause in this situation, which would mean no severance package or access to Employment Insurance (EI) benefits.

To justify terminating you for cause, the company must prove progressive disciplinary measures were applied and that a lesser punishment wouldn’t be acceptable, which is very difficult to do.

This type of dismissal is reserved for the worst kinds of workplace offences, such as serious insubordination, theft, or assault.

LEARN MORE
• How to calculate severance pay
• Severance pay in a recession
• Wrongful dismissal in Ontario: Your rights

Lost your job? Speak with an employment lawyer

If you are fired or let go after refusing a pay cut, or for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our lawyers in Ontario, Alberta, and B.C. have helped tens of thousands of non-unionized individuals resolve their workplace issues.

We can review your situation, enforce your rights, and ensure that you receive the compensation you are owed.