Can an employer force a pay reduction for remote work?

TRNTO X dNovo Group

More employers and employees are shifting to either hybrid work models or remote work in the aftermath of the first year of the COVID-19 pandemic.

By the end of 2021, according to Gartner, approximately 32% of all employees worldwide will be remote workers. This is a significant rise from only 17% in 2019.

Employees staying on with a current employer and choosing to work remotely on a permanent basis may be concerned about having their pay cut.

Alternatively, an employer may want the employee to return to working from their business location, such as an office, as opposed to continuing with remote work. With more than 97% of remote workers not wanting to return to the office according to Forbes, this clearly suggests a conflict.

There are important points in both the perspectives of the employer and employee, and no doubt this is a conversation that many businesses and workers are having right now as we look ahead towards a new year.

What An Employer Can Do?

If your model prior to the pandemic involved remote work, you cannot force an employee to begin working from a commercial office all of a sudden. This would change the terms of their employment, something which an employee is legally allowed to refuse. As a business, it’s a requirement to uphold the terms of employment as set out in the employer-employee contract.

That aside, for employees that are working remotely purely for reasons related to the pandemic, an employer is legally allowed to request them to return to working from a public workspace. Should an employee refuse this request, it is within an employer’s rights to use this as grounds for dismissal.

Some businesses are finding it more advantageous to avoid this conflict and instead, move towards a model that allows workers to work remotely. After all, the average business can save roughly $11,000 annually per employee who works remotely at least half the time, according to Global Workplace Analytics.

Supporting more remote work for a small business may even mean you’re able to shrink offices and pay less overhead or possibly nothing at all on a commercial lease.

MB Law, a Toronto law firm specializing in business and real estate law, has consulted many companies that have either already shifted to a remote model or who are considering it. One of the challenges is admittedly removing one’s self from their lease. If you are working from a rented office and are considering shifting to a remote work model, you will want to find an experienced real estate lawyer to look over your commercial lease and provide you with a thorough understanding of your rights.

Can An Employee Have Their Wages Cut Without Their Consent?

If you are an employee working remotely, you cannot have your pay reduced because of it.

Employees have rights and protections, just like employers do. As an employee, it is considered a violation of your terms of employment to force a pay cut onto you. While an employer may be within their legal rights to require you to return to working from an office, if there is an option to remain working remotely and you opt in, it does not necessarily mean your salary or hourly wage can be lowered as well.

Stacey Ball, an employment lawyer and the author of Canadian Employment Law, states it plainly.

“Employers have no legal grounds to cut an employee’s pay without their consent. A major reduction in pay tied to an employee’s decision to continue working remotely is a reason for constructive dismissal. With that, an employee can refuse the new terms of their employment. Employees can treat this situation as a termination of their employment, if a reduction in wages is forced upon them.”

If this happens to you and you refuse to accept the pay cut stipulated, it entitles you to any severance package associated with your terms of employment and can amount to a legal challenge if the employer refuses to pay.

What You Can Do If You’re Being Offered A Pay Reduction For Remote Work

If you are an employee and your employer has tried to impose a pay cut onto you for remote work, speak up. Do not accept the pay cut if it is within your legal rights. Speak with a lawyer. There are options available to you to ensure your rights are protected. An employment lawyer can provide accurate insights into how to make a claim for constructive dismissal and to ensure you receive the severance you are owed.