Pay cut at work
in Ontario
Has your employer cut your salary, commission or hours without your agreement? Information for employees in Ontario, with advice online by video or phone.
Initial consultation free for employment and human rights matters.
In Ontario, pay is a fundamental term of employment. An employer generally cannot make a significant cut to an employee's pay without agreement, unless the contract allows it. A significant unilateral cut may be a constructive dismissal. Smaller changes, or changes the contract permits, may not be. The answer depends on the size of the cut, the contract and how the employee responds.
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Change review
We read the contract and the change, and explain whether it may amount to constructive dismissal.
More about constructive dismissal →Options before you decide
We set out what accepting, objecting or resigning could mean.
More about contract reviews →Negotiation
We negotiate with your employer and, where needed, take the matter further.
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You book
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By video or phone. You tell us what happened. We listen, then explain your options in plain language. Ask anything.
You decide
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The legal test
In Farber v. Royal Trust Co. (1997), the Supreme Court of Canada held that where an employer unilaterally makes a substantial change to an essential term of employment, such as pay, the employee may treat it as a dismissal. In Potter v. New Brunswick Legal Aid Services Commission (2015), the Court described two ways constructive dismissal can arise: a single unilateral breach that substantially changes an essential term, or a course of conduct showing the employer no longer intends to be bound by the contract.
Courts look at the change objectively. There is no fixed percentage. A large cut to base salary is more likely to qualify than a small or temporary one, and changes to commission plans or bonus terms depend on what the contract says.
- A reduction in salary or hourly rate.
- A change to commission rates, territory or bonus structure that significantly reduces earnings.
- A cut to the hours set out in the contract.
- Removal of significant benefits.
Responding to a pay cut
An employee generally has three paths: accept the change, object and keep working while making clear the change is not accepted (often called working under protest), or treat the change as a constructive dismissal and resign. Continuing to work under the new terms for a long time without objecting may be treated as accepting them. Under the Employment Standards Act, a constructive dismissal generally counts as a termination only if the employee resigns within a reasonable period.
Courts have also said that, in some cases, an employee should consider continuing to work for the same employer while looking for other work, if the relationship has not broken down. Because the choices interact, many people find it useful to understand their position before they reply to the employer.
Common situations
Pay cuts are often presented as temporary, shared across a team or tied to business conditions. Those explanations can be relevant, but they do not by themselves make a change lawful. Courts look at whether the employee agreed, whether the contract allowed the change, and whether something was given in return, such as job security or a later raise.
- An across-the-board salary reduction announced by email.
- A new commission plan presented for signature, with a deadline.
- A move from salaried to hourly pay, or from full-time to part-time hours.
- A demotion that carries a lower pay grade.
What the Employment Standards Act requires
Whatever the contract says, an employer must pay at least Ontario's minimum wage and must pay wages earned for work already done. An employer generally cannot deduct money from wages unless a law or court order requires it, or the employee has given written authorization that states a specific amount or a way to calculate it. Deductions for faulty work or cash shortages are generally not allowed, even with consent.
Time limits
A claim under the Act for unpaid wages generally has a two-year limit. A court claim for constructive dismissal is generally two years from the dismissal. If the pay cut is linked to a Code ground, such as disability, pregnancy or age, an application to the Human Rights Tribunal of Ontario generally must be filed within one year.
A lawyer can review the contract and the change and explain the options. Consultations are online by video or phone, across Ontario. Initial consultation free for employment and human rights matters.
Related: Constructive dismissal · Constructive dismissal in Ontario (guide) · Employment law
General information, not legal advice. Last reviewed: October 2026 · Lutfi Law
Common questions
Still unsure? Our assistant can answer general questions any time.
Ask the AI assistantCan my employer cut my pay in Ontario?
Not significantly and without agreement, unless the contract allows it. A significant unilateral cut may be a constructive dismissal. The employer must still pay at least minimum wage.
How big does a pay cut have to be?
There is no fixed percentage. Courts look at the size of the change, the contract and the circumstances as a whole.
What does working under protest mean?
It means continuing to work while telling the employer, ideally in writing, that you do not accept the change. It can affect your later options, so timing and wording matter.
Can my employer take money off my paycheque?
Generally only where a law or court order requires it, or with written authorization stating the amount or how it is calculated. Deductions for faulty work or cash shortages are generally not allowed.
Is the first consultation free?
Initial consultation free for employment and human rights matters.
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