A month after I was hired, my hourly pay was reduced. What recourse do I have?

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I was hired for a new job last month. The position was advertised as $18 an hour, but when I received my contract, it said $20 an hour, and that was what I was paid. HR just told me that they made a mistake on my contract and that I was supposed to be earning only $18 an hour. They admitted it was an error on their part. However, my contract says $20 an hour and that is what I signed. Can they reduce my pay even though I signed a contract that says otherwise?
Ryan Edmonds and Patrycja Geca, Ryan Edmonds Workplace Counsel, Toronto
Regardless of whether the higher wage was a bona fide mistake, the employer can still make adjustments to an employee’s pay; though not without legal risk.
When an employer unilaterally makes a significant change to an important term of employment, employees can refuse the change and claim a breach of contract. For example, a significant and unauthorized reduction in pay can be treated as a “constructive dismissal,” which essentially triggers a termination of employment without cause and gives rise to a claim for severance pay. Although there is no definitive rule about what is a “significant change,” if an employee’s pay is reduced by 10 per cent or more, this could be a constructive dismissal.
With that in mind, the question is often not whether a particular change constitutes a constructive dismissal, but whether it makes sense to pursue such a claim. Not only does claiming constructive dismissal mean ending one’s employment, but it also means picking a fight with the employer over the claim’s validity.
Because every situation is different, for some employees it can absolutely make sense to pursue that course of action. But for this individual, query whether the smarter move is to simply start looking for a new position while continuing to collect a pay cheque. As the saying goes, it’s typically easier to find a job when you have a job.
Deciding whether to claim constructive dismissal requires careful consideration of all the circumstances. An employment lawyer can provide personalized guidance tailored to your specific situation.
Tareq Shahwan, associate, Randy Ai Law Office, Toronto
Regarding your question about the discrepancy in your employment contract’s wage rate, it is crucial to recognize that if the formation of your contract involved clear elements of offer and acceptance, then it is a legally binding agreement. Specifically, your employer offered $20 per hour, and you accepted this offer by signing the contract. Under contract law, this agreement is enforceable as executed.
In employment law, any modification of the contract terms proposed by an employer must be supported by fresh consideration – that is, a new benefit or detriment must be exchanged between the parties. Simply put, your employer cannot lawfully decrease your wage to $18 per hour without offering you something in return, which you must accept for such a change to be valid.
Moreover, should your employer attempt to enforce this wage reduction unilaterally, it may be regarded as a fundamental breach of the employment contract. Such a breach could potentially be construed as constructive dismissal, especially if the new term substantially alters the original terms of your employment to your detriment.
Given these circumstances, I recommend discussing this issue further with your employer to remind them of their legal obligations and the requirement for mutual agreement on any contractual changes. Should negotiations not yield a satisfactory resolution, it may be advisable to consider legal action to enforce the terms of your contract or address potential claims for constructive dismissal.
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