Can My Employer Cut My Pay or Hours in Ontario?
A significant cut to your pay, hours, or commission without your agreement can be a constructive dismissal, letting you treat the job as over and claim severance.
Key takeaways
- A significant, one-sided cut to your pay, hours, or commission can be a constructive dismissal.
- If it qualifies, you can treat your job as ended and claim the same severance as a firing.
- Minor or temporary changes may be allowed. The bigger and more permanent the cut, the stronger your position.
- Cutting your hours to zero can be a layoff or a dismissal, depending on your contract.
- Do not just accept a major cut, and do not quit on the spot. Get advice first.
In this article
Your pay and hours are core terms of your job, not things an employer can rewrite at will. When a company imposes a serious cut without your agreement, it may have effectively ended the deal you signed up for, which the law can treat as a dismissal.
✅Quick answer. Not significantly, and not without your consent. A substantial, unilateral cut to your pay, hours, or commission structure can be a constructive dismissal, which lets you treat the employment as terminated and claim severance. Small or genuinely temporary adjustments may be permitted, and the ESA sets a wage floor, but a major cut is a serious legal event.
Can your employer reduce your pay?
Not by a meaningful amount without your agreement. Pay is a fundamental term of your employment. A significant unilateral pay cut is one of the clearest examples of constructive dismissal. Your employer also cannot reduce your pay below minimum wage or below what the ESA otherwise requires. The Supreme Court set the test in Farber v. Royal Trust Co. ([1997] 1 SCR 846): a constructive dismissal happens when an employer makes a substantial, unilateral change to a fundamental term such that a reasonable person in the employee's position would feel the essential terms of the job had been changed. A serious cut to your compensation is exactly that kind of change.
How big a cut has to be to matter
There is no magic percentage, but the larger and more permanent the cut, the more likely it crosses the line. A small, temporary trim during a genuine downturn may not be enough on its own; a serious, lasting reduction usually is. Courts look at the overall impact on you and whether the change strikes at the heart of your compensation.
A striking example is Russo v. Kerr Bros. Ltd. (2010 ONSC 6053). A long-service employee had his total compensation cut roughly in half, from about 114,000 dollars to around 60,000 dollars, when his employer restructured. The court held this was a constructive dismissal even though the company was in genuine financial difficulty: real hardship may explain why an employer wants to cut pay, but it does not give the employer the right to impose that cut on an employee without consequences. A reduction of that magnitude goes to the root of the contract.
Pay or hours slashed? See what you could claim
A serious, unilateral cut can be a dismissal you can act on. Estimate the severance claim with our free, case-law-calibrated calculator.
What about cutting your hours?
A significant reduction in your hours is a reduction in your pay, and the same analysis applies. Cutting your hours to zero is effectively a layoff, which is not automatically lawful: unless your contract allows it or you agree, it can be a constructive dismissal from the start. See your rights when laid off.
What about commission or bonus changes?
Changing the structure so you earn materially less, for example slashing commission rates, moving the goalposts on targets, or removing a bonus you relied on, can also be a constructive dismissal if the impact is significant. The label the employer uses matters less than the real effect on your income.
⚠️Do not quit, and do not just accept it. If you simply keep working under the new terms as if nothing happened, you may be found to have accepted the change. If you quit over a cut that was not big enough to qualify, you may get nothing. Object in writing and get advice before deciding.
What can you do about a pay or hours cut?
- 1.Get the change in writing, including the amount and whether it is permanent.
- 2.Put your objection in writing and reserve your rights.
- 3.Do not resign in the moment.
- 4.Get advice on whether the cut is a constructive dismissal. A free review tells you whether you can claim.
Frequently asked questions
Can my employer cut my pay without my consent in Ontario?
Not significantly. A substantial unilateral pay cut can be a constructive dismissal, letting you claim severance. Your pay also cannot drop below minimum wage or the ESA minimums.
Is a pay cut constructive dismissal?
A significant, one-sided pay cut usually is. A small or temporary adjustment may not be. The larger and more permanent the cut, the stronger the claim.
Can my employer cut my hours to zero?
Cutting hours to zero is effectively a layoff, which is not automatically legal. Unless your contract allows it or you agree, it can be a constructive dismissal entitling you to severance.
My commission was slashed. Is that constructive dismissal?
It can be, if the change significantly reduces your real income. Cutting commission rates or removing a bonus you relied on can amount to constructive dismissal regardless of how the employer labels it.
Carmen Reyes
Legal Writer, Mirza Law
Carmen Reyes is a legal writer at Mirza Law in Toronto. She writes about constructive dismissal, workplace changes, and how Ontario employees can protect themselves when their job changes under them.
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