Is it legal to decrease an employee’s pay when returning to work from being sick and on restrictions?

If the employee cannot do all aspects or duties of the job that he or she had been hired to do--such as due to restrictions--then the employee's pay may be reduced; indeed, if the employee cannot effectively work, he or she could even be terminated. The law does not require employers to pay people when they cannot do their jobs, even if the reason is illness, injury, or recovery.

There is a wrinkle in that if the employee's condition would qualify as a disability--and not all medical conditions do; to be a disability, it must have significant and not-easily-remedied impacts on basic life functions--then the employer must offer the employee "reasonable accomodations" to do the job, if possible. A reasonable accomodation is a change in duties or provision of assistive technology or devices, if such is not too expensive or disruptive. Some examples:

1) A lobby security guard has trouble standing for prolonged periods--provide a chair or  stool and allow him/her to sit.

2) An employee is hard of hearing; provide a phone that amplies sounds (or for an employee with some visual impairment, provide a computer screen that magnifies).

3) Provide more ergonomically designed furniture and  computer interfaces (e.g. voice recognition or dictation software) for employees with back problems or carpal tunnel syndrome.

4) Someone has trouble taking mass transit to work; allow him or her to work slightly different hours (if  the nature of the  job permits) so he or she can avoid rush hour and drive to work.

Other examples abound, but the key point is that  the accomodation cannot too costly, and with it, the employee must be able to do his or her job. If there is no reasonable accomodation which would let an employee do his or her job functions, he or she could have pay reduced, be demoted, be transfered, or even potentially be terminated.