This morning, the Ontario Government announced major increases to the Ontario Minimum Wage, which will rise from the current level of $11.40/hour to $14/hour on January 1, 2018 and to $15/hour on January 1, 2019, followed by annual increases at the rate of inflation. Part-time students under age 18 will see minimum wage increases to $13.15/hour on January 1, 2018 and to $14.10/hour on January 1, 2019.

The Ontario Government also provided its response today to the Final Report of the Changing Workplaces Review, which was released last week.

Minimum Wage

When fully implemented, Ontario’s $15/hour rate will be, along with Alberta’s, the joint highest minimum wage in Canada. RCC is deeply concerned about the impact of this change, both in regard to the size of the increase and the short runway to full implementation, allowing businesses little time to adjust.

Large increases in the minimum wage may appear to be an employee-friendly measure but there is an inevitable trade-off involved which may lead to fewer jobs overall and fewer hours for those who are employed. Most of our merchants’ input costs are fixed, including rent, municipal taxes, utilities and in most cases, the cost of goods. The only ways in which most retail businesses can address rising labour costs are either to reduce hours or to raise prices. And as anyone familiar with retail will understand, price hikes are not feasible in most cases. Our merchants’ competitors are increasingly likely to be online warehouses over the border or overseas than they are to be down the block. If Ontario retail prices were to rise, there would be an immediate impact on Ontario consumers and a longer-term shift of consumer purchases to foreign online vendors, which would itself lead to fewer jobs in Ontario.

RCC has long supported indexation of minimum wages to the Consumer Price Index or to comparable economic indicators, an approach that is in effect in the majority of Canadian provinces and that was, until today, in place in Ontario. That way, employees’ earnings will keep in pace with inflation and there is a level of predictability for business planning purposes. With today’s announcement, the government has diverged from that objective standard to select an arbitrary wage level. In doing so, the government has abandoned the approach recommended by its own Minimum Wage Advisory Panel, which it accepted and adopted into law in 2014.

Employment and Labour Standards

Along with its minimum wage announcement, the government also provided its response to the Changing Workplaces Review (CWR), a wide-ranging study of the effectiveness of the Employment Standards Act and Labour Relations Act.

Relative to the Final Report of the CWR and particularly to some proposals from organized labour, the government’s response is reasonably well balanced but of course, that does have to be viewed against the backdrop of the costs imposed by the minimum wage increase.

The major items on the CWR response are as follows:

Employment Standards Act (ESA)

  • Effective April 1, 2018, the government will mandate equal pay for part-time, temporary, casual, seasonal employees and temporary help agency employees doing the same job as full-time employees. However, employers will continue to be able to pay differentially based on seniority, merit, or quantity or quality of production.
  • As of January 1, 2018, personal emergency leave will be expanded to ten days for all workers, irrespective of the size of their employer, including a minimum of at least two paid days per year. Employers will no longer be able to require physicians’ notes for employees taking personal emergency leave.
  • Effective January 1, 2018, Ontario employees will be entitled to at least three weeks' vacation after five years with a company. This brings Ontario into line with rules in Quebec, Alberta, Saskatchewan and British Columbia.
  • From January 1, 2019, the “three-hour rule” requiring an employee to be paid for three hours of work if their shift is cancelled will apply to any shift cancellation within 48 hours of its scheduled start time. The employee must be paid three hours at their regular rate of pay (rather than three hours at minimum wage under the existing rule).
  • As of January 1, 2019, when employees are "on-call" and not called in to work, they must be paid three hours at their regular rate of pay. This would be required for each 24-hour period that employees are on-call.
  • After having been employed for three months, employees would have the right to request schedule or location changes, though the decision on whether to accommodate these requests would lie with the employer.
  • The government will eliminate the requirement of proof of "intent or effect" to defeat the purpose of the ESA when determining whether related businesses can be treated as one employer and held jointly and severally liable for monies owing under the Act.
  • Beginning in fall 2017, the Ministry of Labour will conduct a review of current exemptions from the ESA and special industry rules, including consultation with affected stakeholders. This review will include exemptions in place for managers and supervisors.

Labour Relations Act (LRA)

  • The LRA will be amended to establish card-based union certification for the temporary help agency industry, the building services sector and home care and community services industry.
  • The government will make access to first contract arbitration easier, while adding an intensive mediation component to the process. Further detail has not yet been provided yet on this aspect.
  • Unions that have achieved the support of 20 per cent of employees will be entitled to access employee lists and certain contact information.

Several more intrusive proposals made by labour organizations were rejected by the government, including deeper involvement in employee scheduling, card-based certification for all industries, sectoral collective bargaining, and changes to the common employer test that would have negatively affected members with franchise or dealer stores.

Next Steps:

RCC has been engaged throughout the CWR process, working to avert government decisions that will negatively affect our businesses and our vital economic role as the province’s (and Canada’s) largest private sector employer.

While the Ontario government seems firmly committed to its minimum wage decision, there may be room to explore offsets in business taxation, particularly given that government income tax revenues will increase along with the minimum wage hikes and with consequent wage increases for those earning above the minimum wage.

There are also additional details to be worked out on implementation of many of the measures referred to above and in particular, with regard to the pending study of current exemptions under the LRA, including managers and supervisors, IT professionals and pharmacists, which may have major consequences for the retail industry.

Both on minimum wage and changes to employment and labour standards, RCC will engage directly with government on issues of particular interest to retail merchants and alongside other business associations on matters of common interest.

Details of today’s announcement can be found at the following here.

If you have any questions or concerns, please don’t hesitate to contact: Karl Littler, Vice President, Public Affairs at: [email protected] or 416-467-3783 I Mobile: 416-906-0040