Pay raises: Rights for employees in Ontario

Does my employer have to give me a pay raise?

No. There is no law in Ontario requiring an employer to give an employee a raise in pay or wages, on an annual basis.

When must an employer give a pay raise?

In Ontario, the decision to increase an employee’s pay is entirely at the discretion of the employer. There are only two circumstances where an employer is legally required to provide a raise: if there is an increase in the minimum wage, or if an employee’s contract explicitly stipulates a pay raise.

It is best practice to provide salary raises to employees so that the employer can retain the best workers, but employers are not legally required to do so.

Can a company increase pay for some employees and not others?

Employers in Ontario are allowed to raise wages for some employees and not others; there is no law requiring salary to be increased equally for all workers at the same time.

As employers in Ontario are trying to retain their workforce and promote loyalty, it is common practice for them to conduct salary analysis. After a review, they may decide to provide merit increases to employees to ensure that salaries remain competitive.

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If the employer has committed to increasing pay for the lowest paid employees, the employer should use best practices to apply the merit increases straight across the board and to each worker without selection and exclusions.

While employers can legally increase pay for some workers and not others, the pay increases should not be based on discriminatory motivations and should be based on objective measures. This may include performance or seniority.

Examples of discrimination

Employers can’t discriminate against their employees by providing better pay or paying employees differently based on the employee’s sex, race, age, or ethnicity.

Common examples include:

• Employers providing more pay to an employee’s counterpart because the counterpart is younger
• Giving a raise to one worker because they are a man, but not to their coworker because they are a woman.
• A pregnant woman being denied a promotion because she is starting a maternity leave soon.

These practices and policies may be discriminatory. If your employer behaves in this manner, you should get precise human rights and employment law advice from Samfiru Tumarkin LLP to determine if you have a viable discrimination complaint.

How do I get a pay raise?

You may be able to get a pay raise from your employer through two methods:

• Ask for one: Explain to your employer why you should receive a pay increase. Use information and evidence to show your accomplishments and the value you provide to the company in order justify the raise. You need to advocate for yourself and show them that you are worth additional compensation.
• Negotiate your employment contract: You may be able to negotiate a clause in your employment agreement that stipulates when you receive a pay increase, and how much it jumps by. This can be done when starting a new job, or potentially well into your tenure with a company.

Can my employer cut my pay?

Your employer can’t cut your pay in Ontario. Unless you agree to the reduced wages or have given them permission to do so through an employment contract, it is illegal for the company to slash your income.

As an employee’s compensation structure is a vital term of their employment contract, a signification reduction in pay will be construed as the employer breaching a fundamental term of the employment contract. This action severs the employment relationship, and the employee can pursue a constructive dismissal for full severance pay.

When you can seek severance

If your employer has advised you of an unwanted reduction in pay, we advise that you reject the proposal in writing. You may have a case for constructive dismissal and might be entitled to severance pay.

If you are fired or lose your job in Ontario after asking for a raise, you should contact us immediately. You can obtain a severance package that is appropriate for Ontario employees, and takes into account several factors, such as age, position, and length of employment.

Because a termination clause in your employment contract can limit the size of a severance package, it is prudent to have it reviewed and your case assessed by an Ontario paralegal or employment lawyer at Samfiru Tumarkin LLP. Employees in Ontario have two years from the date of termination to seek their full severance entitlements.