October 1, 2017 and Upcoming Minimum Wage Increases

Five Canadian provinces are increasing the general minimum wage rate October 1, 2017 as follows: Alberta ($13.60), Manitoba ($11.15), Newfoundland and Labrador ($11.00), Ontario ($11.60) and Saskatchewan ($10.96). The general minimum wage rate increase results in corresponding increases to other rates in the respective provinces.

Note that British Columbia’s general minimum wage increased September 15, 2017 to $11.35 per hour. Other provincial minimum wage rates were also adjusted at that time.

What’s happening in 2018 with the minimum wage?

Ontario has proposed (Bill 148, Fair Workplaces, Better Jobs Act, 2017) boosting the general minimum wage from the October 1st rate of $11.60 per hour to $14 per hour on January 1, 2018 and $15 per hour the following year.

Following a number of committee hearings and debates on Bill 148, the Ontario government has indicated that it won’t back down on the $15-an-hour plan. Businesses are waiting for the government’s relief package “likely on the tax side.” Jeff Leal, the minister responsible for small business, has said Ontario is eyeing the example of Manitoba, which has a zero tax rate for small businesses on the first $1.25 million of active income. Moreover, employers with total remuneration in a year of $1.25 million or less are exempted. Associated groups (associated corporations/certain corporate partnerships) must share the $1.25 million exemption based on the total of their combined yearly payroll.

In the British Columbia September 11 budget update, British Columbia announced the establishment of the fair wages commission to implement the $15 minimum wage increase some time in the foreseeable future. The BC government has altered an election promise to implement a $15 minimum wage by 2021, and will instead give the fair wages commission free rein to suggest a new, possibly longer, timeline.

On June 12, 2017, the Newfoundland and Labrador government released a summary report of feedback from public consultations and online submissions to help establish a clear and consistent method of determining future increases to the minimum wage. The summary report identifies:

  • Support for a transparent method of making future minimum wage adjustments;
  • Benefits and challenges of introducing a standard methodology for adjusting the minimum wage; and
  • Support for linking minimum wage to increases in the cost of living.

Stakeholder response to this consultation confirmed support for the commitment of the provincial government to establish a standardized approach for determining minimum wage that is tied to an inflationary measure and ensures that future adjustments keep pace with increases in the cost of living in Newfoundland and Labrador.

In Alberta, minimum wage will rise a further $1.40 to $15 per hour on October 1, 2018. Weekly and monthly rates will rise by equivalent amounts. The government plans to hold consultations each year on upcoming minimum wage increases and will give employers plenty of time to adjust. They will monitor and analyze effects of the increases along the way.

In Manitoba, the Minimum Wage Indexation Act (Employment Standards Code Amended) enacted in 2017 amends the Employment Standards Code so that the minimum wage is adjusted on October 1 of every year starting in 2017 to reflect changes in the Manitoba Consumer Price Index. Currently, minimum wage is set out in the Code’s regulation. The new law also indicates that beginning in 2018 and before April 1 of every year following, the minister must publish the minimum wage that is to apply under this section on a government website starting on October 1 of that year.

The Prince Edward Island held an annual minimum wage review ending September 15, 2017. The Employment Standards Board reviews the minimum wage rate each year, and makes recommendations to the government based on economic factors in the province, as well as input received from the public and stakeholders. Information gathered during this process will help to make such recommendations. At this time, the government’s is awaiting recommendations.

Takeaway for employers

According to John Laforet, President of Broadview Strategy Group Inc., employers will need to learn how to adjust their business and financial models, sales and marketing strategies to effectively respond to the consequences of a high and rapid minimum wage increases.

Employers should determine whether current staffing levels and pricing strategy are viable with labour cost increases and adjust as necessary. Understanding your numbers is key to ensuring your business achieves sustainable, predictable financial health. Taking your historical financial data and re-forecasting your expenses with the increased labour costs your business will experience when the minimum wage increase is fully implemented will help you understand the impact the minimum wage increase will have on your cash flow.

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