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Coronavirus: What to do if your employer cuts pay or reduces hours

Hispanic woman using computer.
Hispanic woman using computer. Getty Images

The coronavirus pandemic is affecting employers and employees alike. Many employers have reduced their workforces in response to reduced demand, and many employees have lost their jobs, sometimes without even being offered severance.

In other cases, employees have seen the conditions of their employment change so drastically that their jobs are barely recognizable.

Some employees who have been temporarily laid off have the option of treating that layoff as a constructive dismissal and getting a severance package.

Constructive dismissals, however, come in many forms, and a change in the terms of employment isn’t always the same thing as a constructive dismissal. Here are a few examples of what might count as a dismissal.

Does a pay cut during the pandemic count as being laid off?

Not necessarily. Employers do have some latitude in changing compensation if those changes are relatively minor and made on a temporary basis.

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Employers who make more substantial changes for longer periods of time, however, could be exposed to a claim for constructive dismissal.

For example, if your employer cuts your salary by 10 per cent for the length of your province’s state of emergency, but then pays you the normal amount after, that would likely not qualify as a constructive dismissal.

On the other hand, if your employer cuts your salary by 10 per cent or more on a permanent basis, or without a commitment to return your pay to normal levels in the near future, that may constitute a termination and entitle you to a severance package.

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In either case, an employee who experiences a salary cut — even if it does not reach the level of a constructive dismissal — may have a claim to unpaid wages if the employer refuses to pay these amounts at the end of the state of emergency.

READ MORE: Coronavirus: Can you get CERB if you choose not to work?

Can my employer reduce my hours during the pandemic?

As with salary cuts, reduced hours may or may not be a constructive dismissal. It depends on a variety of factors, including the magnitude of the change and whether that change is permanent or temporary.

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Reduced hours probably can’t be considered a constructive dismissal if your hours of work have fluctuated in the past and you have accepted reductions from time to time, or if the reduction in hours only extends for the length of the state of emergency.

If you have a stable, fixed schedule that has been in place for a long time, and you are now only working a fraction of those hours, it’s more likely these reduced hours would count as a constructive dismissal.

Employers who permanently reduce their employees’ hours may need to pay severance to employees who do not accept those reductions.

Can my employer demote me without dismissing me?

A demotion can be a constructive dismissal if it’s significant enough, because it may be considered embarrassing to the demoted employee and may impact future career aspirations.

Even if there is no salary cut, a demotion alone may count as a constructive dismissal, if the employee has significantly decreased responsibilities or a loss of prestige, or has been placed in a humiliating position.

What should I do if I think I’ve been dismissed from my job?

Make it clear in writing that you are not in agreement with the unilateral action your employer has taken. If you don’t, you may have effectively accepted the changes, and the situation may not count as a constructive dismissal later on.

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Speak to an employment lawyer about changes to your pay, hours or responsibilities before leaving your job.

If you stop working and it turns out that your situation is not a constructive dismissal, the law will see you as having resigned voluntarily. This means you won’t be entitled to severance pay or to the Canada Emergency Response Benefit.

Even if changes to your employment amount to a constructive dismissal, leaving your job may not be the right option. An employment lawyer can help you decide what makes the most sense for you.

READ MORE: CEWS vs. CERB: How the two benefits fit together and who may have to return payments


Lior Samfiru is an employment lawyer and partner at Samfiru Tumarkin LLP, one of Canada’s leading law firms specializing in employment law and disability claims.

Visit their website to learn more about constructive dismissal and your rights.