Are you wondering if a company can reduce your pay in BC? Almost everyone has participated in the employment world at some point in their lives.  Sometimes as an employee, other times as an employer.  Despite being part of almost everyone’s world the law surrounding the employment relationship is often not well understood. 

Often the specific obligations and rights that employers and employees have do not matter, so long as the employment relationship is going smoothly. 

Understanding BC’s Employment Standards Act on Pay Reduction

When things aren’t going so smoothly, whether it’s an employee who’s not working out or an employer whose business is not doing great and has cash flow or other problems, that is when the rights and responsibilities of the employer and employee start to matter.  

While there can be many legal questions that can arise out of the employment relationship, however, one of the most common questions is, “Can my employer reduce my pay?” 

The answer to this question can change depending on the jurisdiction you are living in and the relevant laws and statutes.  

Legislative Protections and Employment Contracts

In British Columbia, the Employment Standards Act [RSBC 1996] CHAPTER 113 (often referred to as the ESA) was introduced as legislation with the purpose of establishing minimum employment standards to be expected in the workplace and to establish basic protections for workers. 

The standards and protections established by the Employment Standards Act are legislative required minimums and cannot be contracted out of. 

If you have an employment contract that purports to contract out of the minimum entitlements laid out in the Employment Standards Act, the offending clause of the contract could render the entire employment contract unenforceable at law.  

While an employer cannot contract out of the minimums established by the Employment Standards Act, there is great latitude in what can be agreed to between an employer and an employee with respect to their employment relationship.

When Employers Can Reduce Your Pay

There are extremely limited circumstances in which an employer can unilaterally reduce a worker’s pay, with the most obvious one being when a change to pay is something conceived of in the employment agreement.  

As discussed above, employment agreements enjoy a great amount of freedom over the terms, so long as they do not run afoul of the minimum standards created through employment standards legislation. 

The employment agreement can deal with pay, overtime, bonuses as well as any other area of the employment relationship.  If an employment contract provides that an employer can reduce their workers’ pay in specific circumstances, if those circumstances occur then an employer could be well within their rights to reduce an employee’s pay pursuant to the employment agreement.

Key Reasons an Employer Might Propose a Pay Cut in British Columbia

That being said, clauses that allow employers to unilaterally make changes to pay structures are rare and their enforceability can be questionable. 

If you have a situation where an employer is attempting to rely on a clause in your employment agreement to reduce your salary you should contact an experienced employment lawyer to review your employment agreement so you can make sure you fully understand your rights and all the options that are available to you. 

Another circumstance in which there may be a reduction in an employee’s pay is when an employee is returning to work after an illness or injury and the only position available at the workplace which can accommodate the returning employee’s restrictions is a position that attracts a lesser salary. 

Legal Protections Against Unjustified Salary Reductions in BC

The law regarding the accommodation of employees in a return-to-work situation is a complex area beyond the scope of this article.

A final example of when an employer could reduce an employee’s pay is when the employee agrees to it.  If you are an employee you should know that just because your employer asks you to agree to accept a lesser amount of pay you do not have to agree to accept that change. 

There can be times when it would make sense for an employee to agree to a reduction in pay, however, that does not mean that an employee is obligated to accept such a change if it does not benefit them. 

Employees should never agree to a change in their contractual relationship with their employer unless they are made aware of their rights and the implications of any contractual changes. 

Provisions in your employment agreement

If there is no contractual provision in your employment agreement that specifically allows for your pay to be reduced unilaterally by your employer, then there are very few circumstances in which they can attempt to do so.  In fact, any change to your pay made without your agreement could very well result in a constructive dismissal.  

A constructive dismissal is when an employee is terminated from their position by virtue of an employer’s action or inaction, as opposed to a clear and unambiguous termination letter. 

Examples of such action would be the action of unilaterally reducing an employee’s pay or unilaterally changing an employee’s duties.  An example of inaction would be when an employer allows for a toxic or discriminatory work environment that infringes upon one of their employee’s human rights. 

The Role of Employment Contracts in Determining Pay Reductions

Failure to take action could lead to an employee alleging that the working environment was such that they were constructively dismissed.

If you are constructively dismissed then you are treated the same as if you have been terminated without cause and as such you would be entitled to severance based on, amongst other things, your age, pay, and length of service to your company.  Your entitlement to severance could be up to as much as 24 months of pay.

Reduce My Pay in BC – Seek Legal Advice

As with many areas of law, while an article can give general advice, the devil is in the details and if you are an employer or an employee grappling with the issue as to whether or not an employee’s pay can be reduced it is important to make sure you get proper legal advice before acting. 

For employers, this means making sure an experienced employment lawyer has reviewed any employment agreements and given you advice prior to approaching an employee about a reduction in salary. 

For employees, never agree to a reduction in pay unless you’re sure your employer is entitled to do so.  Make sure you get legal advice to confirm your rights before agreeing to anything.

We hope you found this guide on what to do when your company reduces your pay in BC useful.