In Ontario, it is unlawful for your employer to drastically cut your salary, change your hours or reduce your pay. When an employer decides to enforce a significant pay cut or other major changes to your compensation, you have the option of bringing a lawsuit for constructive dismissal.
When Does a Pay Cut Result in a Constructive Dismissal?
A constructive dismissal is a type of lawsuit that allows an employee to seek severance pay as an alternative to accepting one-sided changes to key terms of employment. It is based on the idea that substantial changes to the employment relationship are a breach of contract that effectively results in the employee’s dismissal, which entitles them to severance pay.
A constructive dismissal can occur whenever an employer proposes changes that will result in a significant income loss. Some common examples include:
- Removing bonuses
- Changing a commission plan
- Reducing hours of work
- Changing your sales territory
- Changing your commute to an unreasonable amount of time
- Demoting you to a humiliating position or a loss of status (i.e. removing management duties)
Employees should be aware, however, that minor changes to compensation may not be regarded as sufficient grounds to claim a constructive dismissal. It is therefore important to consult an employment lawyer to determine precisely whether a change is considered substantial in the eyes of the law.
Can I Agree to a Pay Cut?
Of course, you can always agree to change or even lower your compensation in collaboration with your employer. For instance, it is not uncommon for employees to move from full-time to part-time hours or agree upon new bonus and commission structures.
However, a danger arises when an employee disagrees with a pay cut or change to compensation and fails to take action. When an employee receives lower pay and remains silent, they risk an Ontario Court concluding that they forgave or agreed to the changes, which can defeat a constructive dismissal claim.
How Do I Respond to a Pay Cut?
Whenever you face a pay cut or changes to key employment terms, you must speak with an experienced employment lawyer immediately. There are two important reasons to obtain legal advice at the earliest opportunity. First, an employment lawyer will help you determine whether you have a claim for constructive dismissal based on your unique circumstances. Secondly, if you stay silent and delay responding to your employer in the face of a pay cut, you risk losing out on significant rights and entitlements.
Where Can I Find an Employment Lawyer in Toronto?
Lecker & Associates is a Toronto employment law firm that has fought for employees for over 35 years. Our experienced Toronto employment lawyers have represented clients in thousands of cases involving wrongful dismissal, constructive dismissal, employment contract disputes, sexual harassment in the workplace, and short- and long-term disability claims.
Call us today at 866-473-1685 or use our contact form to request a consultation to discuss your case.
