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Changes to Ontario Employment and Labour Laws: The Financial Effect for Business
On May 31, 2017, Premier Kathleen Wynne announced proposed changes to the employment and labour laws of Ontario. The proposed legislation includes many changes that will affect businesses and consumers alike. Today, I would like to not only outline the changes, but demonstrate how a theoretical business could possibly be affected by these changes.
Minimum Wage, Vacation Pay & Paid Emergency Leave
As already discussed, there is a proposed increase to minimum wage from the current $11.40 (as of the date of this article) to $14.00 effective January 2018 and then a further increase to $15.00 effective January 2019.
Another change that you should be aware of is the increase of vacation pay for employees that have been with the business for more than 5 years. If you have an employee that has a tenure of over 5 years, they are now entitled to three weeks vacation per year instead of the minimum requirement of two weeks.
Are you an employer that pays for your employees to be away from the office if they are sick, or have a family situation to attend to? In the past, an employer that has more than 50 employees had to follow specific guidelines. In the proposed changes, the guidelines would include all businesses, regardless of size. It has been proposed that the employer must now provide ten days a year (two of the days paid) for Paid Emergency Leave (PEL). This may affect how employers staff their businesses, and should also be taken into consideration when factoring the expenses for payroll going forward.
How Ontario’s Employment Changes Impact Business
Let’s use the following example. You are a business that has one full-time employee to help you run your small business. You pay them minimum wage and they work 40 hours a week. Currently, your responsibility is to pay for eight statutory holidays, and two weeks vacation. These requirements have been captured into the 40 hours per week. To put it another way, you are the majority of businesses in Ontario.
This chart shows the basic increase in costs only. It does not factor in the cost of having to find a replacement employee when your employee takes vacation or calls in sick. This calculation does not include the costs of WSIB (Workplace Safety Insurance Board), nor does it include any Employer Health Tax calculations.
Premier Wynne has also proposed additional changes to employment standards that will benefit employees across Ontario in a myriad of ways. I will not expand on these changes as they are not the topic of discussion today.
If this proposed legislation is passed, businesses in Ontario will need to reevaluate how to budget for this increase in costs for running their businesses whether they have employees or not. Regardless of the size of business that you are today, we are in business to make a profit.
Plain and simple.
Therefore, if your costs and expenses increase and you wish to maintain the same profit margin that you are experiencing right now, you will need to plan how to increase the price of your services and/or products, or decrease the volume or amount of product you sell and maintain the same price for the lower volume going forward.
Voice Your Opinion
What are your thoughts on these proposed changes? Are you incensed or happy about what has been discussed? You have options as to how you can express your concerns. Feel free to comment as we love to encourage dialogue. Or you can contact the following offices to voice your thoughts and opinions:
- Premier Kathleen Wynne: (416) 325-1941 or email@example.com
- Minister of Labour Kevin Flynn: (416) 326-7600 or firstname.lastname@example.org
- MPP Contact Information: (416) 325-7500 (collect calls accepted)
Until the next time,