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Canada’s Federal Minimum Wage Increasing April 1st

As of April 1st, 2024, Canada’s federal minimum wage is set to increase from $16.65 per hour to $17.30 per hour. The federal minimum wage applies to employees who work in a federally regulated business or industry, which covers a small proportion of Canadian workers.

The minimum wage is the lowest permitted wage that an employer can pay an employee. This wage rate differs by jurisdiction, with every province and the federal government each having their own minimum wage rate.

What Businesses or Industries Are Federally Regulated?

Federally regulated businesses or industries can generally be categorized as either falling into the private sector or public sector. Federally regulated private sector industries include banks, air transportation, and most federal Crown corporations. Federally regulated public sector industries include the federal public service and parliament. A comprehensive list of federally regulated industries and workplaces is available on the Government of Canada website.

How are Federal Minimum Wage Increases Determined?

Minimum wage increases for federally regulated businesses or industries are based on Canada’s Consumer Price Index, and increases are made to account for inflation. The Consumer Price Index compares the cost of a fixed assortment (commonly referred to as a basket) of consumer goods and services and compares the cost of that basket over time to evaluate changes in consumer prices. The average annual increase in the Consumer Price Index in 2023 was 3.9%. This increase in the Consumer Price Index has contributed to the adjustment of the federal minimum wage.

Does This Increase Impact Ontario’s Minimum Wage?

Canada’s federal minimum wage is independent of Ontario’s provincial minimum wage. Ontario’s provincial minimum wage, which is currently at $16.55 per hour, will remain the same and apply to all individuals who do not work in federally regulated businesses or industries.

The provincial minimum wage rate is only applicable to employees in federally regulated industries if it is greater than the federal minimum wage rate. If the provincial minimum wage rate is higher than the federal minimum wage rate, then the general rule is that all employees in the province of Ontario (including those in federally regulated businesses or industries) would receive the higher provincial wage rate. This is not the case in Ontario, as the provincial minimum wage of $16.55 per hour falls sixty-five cents below the federal minimum wage rate.

How Do Provincial Minimum Wage Increases Work?

The provincial minimum wage rate varies from province to province. In Ontario, rules governing minimum wage are contained in the Employment Standards Act (ESA). The ESA includes information about what the provincial minimum wage is, exceptions to the minimum wage, and how changes to the minimum wage take place.

In section 23.1(4) of the ESA, a scheduled annual adjustment is described. This annual adjustment states that every October 1st, starting in 2022, Ontario’s minimum wage is adjusted to account for inflation using the following:

Formula for adjusted wage is Previous wage multiplied by (the Consumer Price Index for the previous calendar year divided by the Consumer Price Index for the calendar year before that).

The Consumer Price Index intended to be used for this calculation is the Consumer Price Index for Ontario which includes all items and is published by Statistics Canada on the Consumer Price Index portal.

If the resulting adjusted wage is not a multiple of five cents, then it is rounded to the nearest multiple of five cents. This calculation is to be disregarded if the resulting adjusted wage is lower than the previous wage. The new minimum wage rate will likely be announced by the government of Ontario soon, as the rate should be published on or before this upcoming April 1st, to come into effect in October of this year.