My company is downsizing. Are they allowed to offer me a more junior role with a big pay cut?

I have worked for the same company for 29 years. They’re downsizing and offered me an alternative job with a 20-per-cent pay cut. I was extremely disappointed to learn that this was a junior position I held when I first started working for the company. Is this allowed? I would like to take this offer with a smile and continue my job with the same level of dedication and professionalism, but I worry that my frustrations over the new role will interfere with my productivity. What should I do?
Waheeda Ekhlas Smith, barrister and solicitor, Smith Employment Law, Toronto
To answer this question, I will presume that you do not have a valid employment contract that explicitly allows for significant pay cuts or role changes. In that case, you likely have a claim for constructive dismissal against your employer.
Constructive dismissal can happen when an employer has not formally terminated a worker’s employment, but instead has made a substantial change to an essential term or condition of the employment contract. In such a situation, the employee can treat the employment relationship as having been terminated by the employer. In other words, although the employer has not dismissed the employee, they are behaving as if they have dismissed the employee.
What is considered a “substantial change” to an employment relationship? It can mean a significant reduction in the employee’s compensation (20 per cent in your case) or a drastic demotion and role change (in your case, rolling back 29 years of seniority and experience).
What can you do? You can resign, claim constructive dismissal and seek a termination package as if you were actively dismissed. Or you could: 1) claim constructive dismissal without resigning or 2) refuse to accept the proposed offer and insist on the previous terms of your employment or 3) accept the proposed offer.
Bear in mind that the burden to prove constructive dismissal is on the employee and it is also a time-sensitive option. So before making any of the choices (especially the resignation option), speak to an employment lawyer first and do so quickly. An experienced employment lawyer will guide you on strategy, advise on the options available to you specifically and help protect your rights.
Laura M. Muir, chief human resources officer, Polaris Transportation Group, Mississauga
I am sorry to hear that your company is downsizing, however, during these tumultuous economic times we are seeing companies making difficult decisions.
It is positive that the company wants to retain you as an employee while parting with others. I would suggest booking an appointment with your human resources department to have a transparent and open-minded discussion on your continued future with the company. They should be empathetic to your concerns, but feel free to ask questions such as:
Companies will post opportunities to consider alternative candidates and compensation, thus, despite your tenure it does not guarantee your return to that role if things change. Your salary in the old position would also be relative to your tenure and may be over the current market rate. An open, honest discussion with HR should let you know where you stand and what to focus on.
I encourage you to meet with a few recruitment firms as they can help you prepare a resume and give valuable feedback on the job market. This experience may also let you explore other industries of interest.
It is always easier to find an opportunity when you are working and not feeling despair. I wish you the best of luck and stay positive.
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