Work From Home – Pay Reduction

[vickyp]

#79525

Forum: Community

Hi….we are an Ontario employer. Is it legal to implement a policy that employees who work from home (due to illness, childcare, etc.) are paid at a reduced wage? For argument’s sake, 85% of their normal hourly/daily rate. Would this be allowed if employees agreed to it in writing?

[vickyp]

#79527

An employer can only reduce an employee’s pay if both parties agree to it in writing. Without consent from the employee, an employer faces legal risk of constructive dismissal. However, employers can hire new workers at lower wages. Imposing such policy, especially without discussing and agreeing upon it with your employees, does put you at risk of constructive dismissal. Since constructive dismissal is treated as a termination of employment, you would be obligated to provide the employee with their entitlements upon termination as per the applicable employment standards legislation.
Your first step should be taking a look at your employment contracts to see if you have the contractual rights to alter the terms of employment. If so, you must then provide a new employment contract with the new terms. You may also want to consider offering the employees to return to the office at their current wage.
Here are some additional cases that may help you:
Twenty Percent Compensation Cut Is Constructive Dismissal
Ending Telecommute Arrangements Without Committing Constructive Dismissal
13 Constructive Dismissal Pitfalls to Avoid

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