Can My Employer Cut or Reduce My Pay in Ontario?

If your employer lowers your wages without warning, it’s natural to feel frustrated — and unsure of your rights. In Ontario, employers don’t have the automatic right to reduce your pay, especially if the change is significant.

In many cases, a wage reduction could legally be treated as a termination of your job, even if you’re still working. This is known as a constructive dismissal. When that happens, you may be entitled to a full severance package — just as if you were fired without cause.

Is a Pay Cut Legal in Ontario?

If your boss cuts your pay — whether by reducing your salary, commission, or hourly rate — that change could violate your rights as a non-unionized employee in Ontario.

While an employer may be able to reduce your compensation by a small amount (typically under 15-20%), any larger reduction is often considered a constructive dismissal.

Key Points:

• Your employer can’t reduce your pay without your consent, unless your contract specifically allows it.
• Even if you stay in the role after a pay cut, the law may still view it as a termination.
• This applies to base pay, commissions, bonuses, and hourly wages.

If you’re unsure whether your pay cut is legal — or you’re being pressured to accept it — you should speak to an experienced Ontario employment lawyer before making any decisions.

LEARN MORE
• Should I negotiate my own severance package in Ontario?

What to Do If Your Boss Cuts Your Pay in Ontario?

If your employer suddenly reduces your wages, hours, or commission, you are not required to accept the change, especially if it wasn’t part of your original employment contract.

Unless your employment agreement clearly gives your employer the right to adjust your pay, a forced reduction is likely illegal.

If Your Boss Cuts Your Pay:

• Request the change in writing. Get all details — including how much your pay is being reduced and when it takes effect.
• Don’t agree right away. Ask for time to consider the change. Never feel pressured to sign on the spot.
• Object in writing. Let your employer know by email or letter that you do not agree to the reduction.
• Don’t quit your job — this could impact your right to severance. Instead, get legal advice first.

If your employer moves ahead with the pay cut anyway, that may qualify as a constructive dismissal, which can trigger your right to severance pay.

• Related: How to negotiate your own severance package in Ontario

Can I Be Fired for Refusing a Pay Cut in Ontario?

Yes, your employer can technically fire you for refusing a pay cut — but they must provide full severance pay if they do.

In Ontario, non-unionized employees can be let go through a termination without cause, as long as:

• The decision is not discriminatory (e.g. based on age, disability, or pregnancy)
• You’re provided with the correct amount of Ontario severance pay

If your employer fires you after you object to a pay cut, you likely have a wrongful dismissal case and are owed up to 24 months’ pay, depending on factors like your age, role, and length of service.

Learn More:
• How to calculate severance pay
• Severance pay in a recession

Should I Sign a New Employment Contract That Reduces My Pay?

If your current employment contract doesn’t give your employer permission to lower your wages, they may ask you to sign a new agreement that does.

Many new contracts are written to limit your rights — especially around:

• Severance pay
• Job duties
• Future changes to your salary, hours, or work location

You are not required to sign a new contract immediately, or even within a few days. You have the right to take time and have it reviewed by an employment lawyer at Samfiru Tumarkin LLP.

When Is a New Employment Contract Legally Valid in Ontario?

For a new agreement to be enforceable, your employer must give you something in return — called “consideration.” This could include:

• A raise
• Extra vacation days
• Flexible work hours or remote options

If no additional benefit is provided, the new contract may not be legally valid.

Related:
• “60 days or more”: Is That Clause Enforceable?
• Employment Law Show: What to know about employment contracts

My Employer Sold the Business — Can the New Owner Cut My Pay?

If your company is sold and the new owner offers to keep you on, you may be asked to sign a new employment contract. Before you do, check if it includes a reduction in pay, hours, or commission.

If the new agreement significantly lowers your compensation, you have the right to refuse it — and you may be owed full severance pay from the seller (your original employer).

Even if the reduction isn’t large, or if you accept a role with the new owner and later regret it, you may still be entitled to compensation — though the amount may be limited to statutory minimums under provincial (Ontario’s Employment Standards Act) or federal law (Canada Labour Code).

What To Do:

• Don’t sign a new contract without legal advice
• You may be able to claim constructive dismissal if the new job significantly alters your pay or role.
• You can’t be forced to accept a worse deal — even if the company has changed hands.

Can My Employer Punish Me for Refusing a Pay Cut?

If you object to a pay cut, your employer is not allowed to punish or retaliate against you. Any negative response — like demoting you, cutting your hours, moving you to a different location, or changing your duties — is a reprisal in Ontario, and may be considered a constructive dismissal.

Examples of Illegal Retaliation Include:

• A sudden demotion or change in title
• Being moved to an undesirable shift or location
• Having responsibilities taken away
• Facing verbal threats or pressure to sign a new deal

In Ontario, these are all serious violations of your employment rights.

If your boss responds to your refusal with punishment, contact an employment lawyer at Samfiru Tumarkin LLP immediately. You may be owed a full severance package — up to 24 months’ pay— and potentially other compensation, depending on the situation.

Speak to an Employment Lawyer if Your Pay Was Cut

If you’re a non-unionized employee in Ontario and your employer has:

• Reduced your salary, commission, or hourly pay without your consent
• Pressured you to sign a new contract with lower pay
• Punished you for refusing a pay cut (e.g. changed hours, duties, or title)
• Fired you after you objected to a wage reduction

You may be entitled to full severance pay (up to 24 months’ compensation) through a constructive dismissal or wrongful dismissal claim.

Samfiru Tumarkin LLP has helped thousands of employees in Ontario stand up to unfair employers. Our Ontario employment lawyers can explain your legal options — with no cost unless we win.

• 👥 Over 50,000 clients helped across Canada
• 💰 Millions recovered in severance and compensation
• ⚖️ No win, no fee — you don’t pay unless we win*
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* Conditions apply. Not all cases qualify.

Contact us now to find out what you’re owed. Book your consultation or call 1-855-821-5900.