Canada’s Minimum Wage Law and Trends: What Can Small Business Expect?

Canadian Workplace Specialist

A minimum wage is the basic labour standard that sets the lowest wage rate an employer can pay to employees who are covered by the legislation. Today one of its main purposes is to protect non-unionized workers in unskilled jobs. It is also designed to stop these workers from trying to undercut each other by agreeing to work for less than someone else.

Employment legislation in Canada makes it an offence for employers to pay covered workers less than the minimum wage. It is also an offence for workers, in collusion with their employer, to work for less than the minimum wage rate or to reduce their wages below the legislated standard by directly or indirectly returning part of their pay.

Canada’s First Minimum Wage Laws Came In 1918

The first minimum wage legislation in Canada was passed in 1918 by both British Columbia and Manitoba. Two years later, Ontario, Quebec, Nova Scotia, and Saskatchewan followed suit. Interestingly, these early wage laws applied only to women and only to some kinds of employment. According to a labour law analysis by Human Resources Development Canada, the thinking at the time was that labour unions (which represented male workers) could do a better job of ensuring that men earned a living wage by bargaining on their behalf.

 

In 2010, Canada’s general minimum wage rates vary by province, from a low of $8 in British Columbia to a high of $10.25 in Ontario. Here are the current minimum wages by province:

 

 

By comparison, the United States minimum wage is $7.25 U.S per hour, though a number of states pay higher than that; up to $8.85 for Washington state.
 

Exemptions From The Basic Minimum Wage Rates

Millions of Canadian workers are not covered by minimum wage laws. Self-employed workers, independent contractors, students in training programs, and salespeople paid exclusively by commission are usually not covered in any province or territory.
 

Most provinces also have their own rules that either exclude some kinds of workers from minimum wage coverage or allow lower minimum rates for some kinds of workers.

Some provinces, for instance, allow employers to pay less to workers who serve alcohol or otherwise accept tips. Ontario is the only province that still allows young workers to be paid less than adults. New Brunswick says domestic workers and live-in care workers aren't covered by minimum wage laws.

Excluded Workers

Certain other classes of workers are altogether excluded from the minimum wage (and other employment standards provisions) in most jurisdictions. This usually includes supervisory and managerial employees, participants in job experience and rehabilitation programs, registered apprentices, and members and students of designated professions.

Other types of workers not covered in some provinces: counsellors or instructors at non-profit educational or recreational camps and playgrounds; extras in film or video production; volunteers in religious, charitable or political organizations; persons engaged in work on fishing vessels; teachers; offenders performing community service; and residential caretakers.
 

These exclusions are subject to change. For example, Manitoba Regulation 82/2010 this year removes from exemption anyone working in training or work experience programs under government or school board authority. However the Regulation adds volunteer camp counsellors at residential camps operated by charitable organizations to the list of employees exempted from the Code's application.

Which Direction Will Wage Rates Go?

Minimum wage rates have been rising steadily—with at least one notable exception (British Columbia)—over the past decade. On average, Canadian minimum wages have risen 20 per cent in the past three years alone. That's significantly faster than inflation. Today the average rate across Canada is somewhere around $9.25.
 

However not all provinces are in lock step in terms of increases. Alberta, Manitoba and B.C. actually froze rates at previous levels in 2010. B.C.’s rate is the lowest among all provinces at $8.00, a figure that hasn’t changed since 2001.

Meanwhile other rates have gone up substantially. In Ontario the minimum hourly wage was $7.75 in 2006. Since then it has risen by $2.75, a 35% bump.

In 2011 certain provinces already have rate increases scheduled. New Brunswick went up to $8.50 an hour this year after a 25-cent increase. It will end with a minimum wage of $10 an hour by Sep. 1, 2011. The Northwest Territories will see its minimum wage go up by 75 cents, ending at $9 an hour.

This is its first wage hike since 2003. Another is expected in April 2011.

For much of Canada a wait and see attitude will prevail. If the economy picks up there will be demands by trade unions and minimum wage employees for additional compensation. But should economic growth lag, it is likely that more provinces will invoke temporary freezes on minimum wage rates.

See your provincial Labour Ministry for more specifics.