Minimum wage for Ontario employers is going up. Here’s what you need to know.
Minimum wage rates in Ontario will increase on October 1, 2020 under the Making Ontario Open for Business Act. The general minimum wage will increase from $14.00 to $14.25.
The general and specialized minimum wage rates that will take effect on October 1,2020 are detailed in the chart below.
General Minimum Wage
This rate applies to most employees.
Example for calculating general minimum wage: One week, Julia works 38 hours. She is paid on a weekly basis. The minimum wage applicable to Julia is $14.00 per hour. Since compliance with the minimum wage requirements is based on pay periods, Julia must be paid at least $525.50 (38 hours × $14.00 per hour = $525.50) in this work week (prior to deductions). (Note that eating periodsare not included when counting how many hours an employee works in a week).
Student Minimum Wage
This rate applies to students under the age of 18 who work 28 hours a week or less when school is in session, or work during a school break or summer holidays.
Liquor servers minimum wage
This hourly rate applies to employees who, as a regular part of their employment, serve liquor directly to customers, guests, members or patrons in licensed premises and who regularly receive tips or other gratuities as a part of their work.
“Licensed premises” are businesses for which a licence or permit has been issued under the Liquor Licence Act.
Employees Who Earn Commission
If an employee’s pay is based completely or partly on commission, it must amount to at least the minimum wage for each hour the employee has worked.
Here’s an example:
Luba works on commission and has a weekly pay period. One week, she was paid $150.00 in commission and worked 25 hours. The minimum wage applicable to Luba is $14.00 an hour. The minimum wage ($14.00) multiplied by the number of hours worked in the pay period (25) is $350.00. Luba is owed the difference between her commission pay ($150) and the required minimum wage ($350.00). Luba’s employer owes her $200.00.
Note: Where overtime hours are worked, the calculation is more complicated.
Industry-specific and job-specific exemptions and special rules may apply to some salespeople who earn commission. Please refer to the special rule tool.
The Three Hour Rule Applies
When an employee who regularly works more than three hours a day is required to report to work but works less than three hours, they must be paid whichever of the following amounts is the highest:
- three hours at their regular rate of pay, or
- the amount the employee earned for the time worked and wages equal to the employee’s regular wage for the remainder of the three hours.
For example, if an employee who is a liquor server is paid $12.20 an hour and works only two hours and is sent home, they are entitled to two hours at their regular rate of $12.20 an hour for the time worked (i.e., $12.20, the liquor servers minimum wage, × 2 = $24.40) plus another hour at their regular rate (i.e. the liquor servers minimum wage of $12.45) for a total payment of $36.60 which is $24.40 (for the time worked) + $12.20 (for the three-hour rule) = $36.60.
Note: The rule does not apply to:
- employees whose regular shift is three hours or less
- in some cases where the cause of the employee not being able to work at least three hours was beyond the employer’s control.
Note: As of January 1, 2019 the three-hour rule applies to students (including students over 18 years of age except if the student works:
- at a children’s camp, unless the student is also a wilderness guide
- providing instruction to or supervising children, unless the student is also a wilderness guide
- in a recreational program run by a charity, unless the student is also a wilderness guide.
Timing for When to Apply the Increase
If Thursday October 1, 2020 falls in the middle of your pay period, it is treated as two pay periods.
Employees are entitled to the previous minimum wage in the first “period” (up until September 30, 2020). And the increased minimum wage in the second “period” (from October 1, 2020 onwards).
If WorkSolute does your payroll you don’t have to worry about splitting the pay period as we do it for you with our “White-Gloved” payroll services. Taking the headache out of payroll has been our main goal since our inception in 2016! Get in touch with us to learn how we simplify payroll.
Starting in 2020, on October 1 of every year the minimum wage rates may increase annually. The new rates to come into effect on October 1 will be published on or before April 1 of every year, beginning in 2020.