Every worker deserves a fair wage for the job they do. Your employees are working hard to make your business profitable, but in return they expect a “piece of the pie” so to speak. As the cost of living increases and financial burden on employees grows, it’s no surprise the federal government has decided to introduce a minimum wage for federally regulated industries before 2022.
What does the federal minimum wage mean for your business? Each province and territory has its own minimum wage, and the federal minimum wage won’t affect organizations under their regulation. However, if you are a federally regulated organization in industries like air and rail transportation, postal services, banks, telecom and broadcasting, and so on, it could mean updating your compensation plans.
Why do we have a minimum wage?
Minimum wage is the lowest hourly rate that an employer can legally pay their employees, and a core labour standard. Historically, governments have put minimum wages in place to protect workers, whether to protect non-unionized workers, to alleviate poverty, or to reduce the number of low-paying jobs. Minimum wages are set by a legislated formula or by order of the current provincial or territorial government, sometimes in consultation with the public or special committees, depending on the jurisdiction.
Why should employers and businesses even care about a minimum wage increase?
Providing a livable wage relieves some of employees’ financial stress, and the result is a more engaged and productive workforce. The bottom line is minimum wage is mandatory. Many employers just update their payroll systems and don’t think much deeper into the other changes that may need to happen to compensate for the increase in labour costs. Minimum wage increases may also prompt reaction from other employees, so it is important to look at wage scales as a whole. Wage compression, living wage, pay equity, and equal pay for equal work matter just as much.
How are minimum wages determined?
Each province and territory sets its own minimum wage rate, and recently the federal government introduced a minimum wage for federally regulated employers. These hourly rates are determined by different factors, including inflation, average wage rates in the jurisdiction, and other economic factors outlined in the consumer price index.
Why now? In their news release, the federal government felt “the COVID-19 pandemic has shone a light on the essential work done by low-wage workers.” Also, stating that “airline agents helped stranded Canadians get back to the country, bank tellers helped us handle the financial impacts of business closures, and workers in the trucking industry got produce and essential goods into our neighbourhood stores.” While it’s easy to think of the costs to your business of a minimum wage increase, it’s important to consider the benefits of more financially stable employees who can better focus on what they do.
What will the federal minimum wage be in 2022?
Effective December 29, 2021, federally regulated employees have their own minimum wage rate of $15 per hour. The government has been clear that if the jurisdiction the employee is working in has a higher minimum wage than $15, then the employees qualify for the higher rate. Examples of employees who may be influenced by the new federal minimum wage include those who make less than $15 per hour in the air, rail, and maritime transport sectors; road transport; postal services; banks; and telecom and broadcasting.
Minimum wage has become an interesting topic, because for the first time in decades a federal minimum wage has been introduced. As an employer, it is essential that you follow updates to minimum wage. Depending on your jurisdiction, this could be published in an act, a regulation, an order in council, or even a news release. Throughout the year and at varying times, your jurisdiction may experience an increase.
At Citation Canada, formerly HRdownloads, we keep a close eye on minimum wage increases and other important legislative changes that may affect your business. Our monthly newsletter, HRdirector, is your member-first glimpse into trends and important HR topics. We also have a jurisdiction comparison tool, making it easy to compare rules and guidelines for all the jurisdictions you operate in. We help our clients stay informed, so they can focus on the more strategic aspects of what they do.
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