Employers across Ontario are reminded that effective October 1, 2024, the general minimum wage has increased to $17.20 per hour, reflecting a 3.9% increase from the previous rate of $16.55 per hour. Along with this adjustment, several category-specific minimum wage rates have also been increased.

In addition to ensuring compliance with these changes, employers should consider their broader potential impacts on the workplace, as detailed below.

Minimum Wage Rates for Select Categories of Workers

The new general minimum wage applies to most workers in Ontario; however, the provincial government has implemented different minimum wage rates for select categories of workers, also effective October 1, 2024.

These categories include:

• Student Workers: The student minimum wage has increased to $16.20 per hour. This category applies to students under the age of 18, who work no more than 28 hours per week while school is in session or who work during a school break, such as summer or winter break. Students employed as homeworkers are exempted from the student minimum wage and must be paid the minimum wage for homeworkers;
• Homeworkers: The minimum wage for homeworkers has increased to $18.90 per hour. Homeworkers are employees who conduct paid work from their homes for an employer. This includes students who work from home, even if they are under the age of 18; and
• Hunting, Fishing, and Wilderness Guides: The minimum wage for hunting, fishing, and wilderness guides has increased to $86.00 per hour for employees who work less than five consecutive hours per day, and $172.05 per hour for those who work five or more hours per day, regardless of whether the hours are consecutive.

Workers Earning Commission

For workers earning commission, their total earnings must equal at least the minimum wage for each hour of work they perform. If an employee’s commission earnings fall below this threshold, their employer must compensate the difference.

Industry-specific and job-specific rules and exemptions may apply to salespersons earning commission. Employers are encouraged to review the government of Ontario’s special rule tool for more information.

Takeaways for Employers

In light of this increase, employers should review their payroll practices to ensure compliance with the new minimum wage rates. Organizations who employ student workers, homeworkers, and hunting, fishing, and wilderness guides should ensure that the category-specific rates are adhered to.

Beyond compliance, employers should proactively account for the potential ripple effects of minimum wage increases, such as wage compression. Wage compression can occur when the pay gap between lower-wage and more experienced or senior employees narrows due to rising minimum wages. This may result in disaffected employees who may feel their compensation no longer reflects their skills, experience, or responsibilities adequately. Preventing wage compression is critical for maintaining employee morale, retaining talent, and preventing skills gaps within the workforce.

To prevent the effects of wage compression, employers should regularly review their compensation structures to ensure that pay remains attractive across all levels of the organization, and plan for future adjustments accordingly. In particular, employers may find it beneficial to consider living wage rates during these reviews. Despite the recent increase, minimum wage rates remain lower than the recommended living wage rates across Ontario. According to the Ontario Living Wage Network, as of November 2023, the living wage in the Greater Toronto Area is calculated to be $25.05 per hour. Even the lowest living wage in the province—reportedly Southwest Ontario, at $18.65 per hour—still surpasses the new minimum wage.

Employers adopting compensation practices that account for both legal requirements and broader HR implications will reap the benefits of a more satisfied and stable workforce. For assistance in reviewing and refining your compensation practices, contact our team.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.