Can Your Employer Reduce Your Salary Without Notice?
By: Sean O’Donnell
These blog posts are meant to provide educational content and are not to be taken as legal advice.
If you are protected under the Employment Standards Act (ESA), your employer cannot reduce your salary without notice. In order to reduce your salary, your employer has to provide you with written notice, and you have to agree to the change.
If your employer attempts to unilaterally change a fundamental term of your employment, without notice, such as your salary – you can file for constructive dismissal, which essentially is a wrongful termination claim.
Under the ESA, a constructive dismissal occurs when an employer makes a significant change to a fundamental term or condition of your employment without your actual or implied consent.
This can be either a significant reduction in salary, or a significant negative change in:
- Work location
- Hours of work
- Authority or;
A constructive dismissal may also include situations where you have been harassed or abused by your employer, or your employer has given you a, “quit or be fired” ultimatum and you resign in response. In order for the employer’s actions to be considered a constructive dismissal you have to resign in response to the change within a “reasonable period of time”.
While it may be tempting to leave your job should your employer try to reduce your salary, if you are found to have quit, you may miss out on compensation that you otherwise would have been entitled to, including Employment Insurance. Your best bet is to talk to a lawyer before making any rash decisions to find out what legal recourse you have available to you.
You may be entitled to common law notice.
Common Law Notice
Common law notice is payment in lieu of earnings over the estimated time it will take you to find comparable employment, and payment can be significantly higher than the minimum set out by the ESA (one week’s pay for every year worked up to eight weeks). Factors taken into consideration by the courts in awarding damages owed for notice pay include:
- Skill set
- Years of service
Although rare, there are a couple of situations where a unilateral reduction in your salary may not lead to a successful constructive dismissal claim. For instance, if your company is undergoing severe financial hardship or if your employment agreement contains a written termination clause limiting your common law notice entitlement.
What to do if Your Employer Reduces Your Salary Without Notice
If your employer tries to reduce your salary without notice, it is important that you do not agree to the terms. You may feel pressured, or worried that you will not be able to find another job but you do have options. Many times the only reason employers get away with pay reduction is because employees are not well educated on their rights.
You should always consult an employment lawyer if you feel like your worker rights are being violated. You may be entitled to more than you think, and a lawyer can help ensure that you get your full entitlement.
Please contact us if your employer has reduced your salary without notice.