Proposed changes to Ontario’s minimum wage, together with reforms to the province’s employment and labour laws, could cause significant hardship to small and medium sized business owners (SMBs) unprepared to meet the challenge.
The proposed changes include the following:
- A 32% increase in the provincial minimum wage from the current $11.40 per hour to $15.00 per hour by January 1, 2019.
- Following five years of continuous employment with the same employer, the minimum vacation entitlement will rise from two weeks (4% of wages) to three weeks (6% of wages).
- Employees will be entitled to 10 personal emergency leave days annually, with two of those days being paid (mandated). Employers will be prohibited from requesting a doctor’s note from an employee taking personal emergency leave. Currently, personal emergency leave applies only to workplaces with 50 or more employees, but that threshold will be eliminated under this legislation.
- Employers will be required to pay part-time workers the same as full-time workers doing the same job.
- Employees who are “on call” but are not called into work must be paid three hours at their regular rate of pay during every 24 hour period they remain on call.
- Unions will be granted access to employee lists and contact information if they can demonstrate they have achieved support of at least 20% of the workforce. Moreover, unions will find it easier to gain certification should an employer engage in illegal conduct aimed at undermining a union’s organizing campaign.
The up-front cost associated with these proposals can be significant for SMBs. A dramatic minimum wage escalation, a third week of paid vacation for longer term employees, and the right to claim two paid sick days per year for every employee will cut sharply into profits. The potential loss of productivity resulting from additional vacation time and personal emergency leave will add another layer of hurt.
In this new world, recruiting for ability and fit, always important, will be essential. Hiring mistakes affect organizational culture and operational efficiency. For many SMBs a disproportionate amount of management time is already spent dealing with personnel issues and fighting fires caused by poor hiring decisions. Getting the right people in the right positions doing the right thing must become the required standard for business. A capable and engaged workforce is the best hedge against this productivity drain.
The development of a merit based performance management system will not only drive engagement and productivity, it will also eliminate the equal pay for equal work provision for part-time workers. This provision will not apply where companies can demonstrate that the difference in wages between full and part time workers doing the same job is based on length of service and performance.
In this new world that Kathleen Wynne is creating, if business is paying more for their workforce they have a right to expect more. Where employees contribute more to the operation and financial performance of their companies, they should benefit more.
Business leaders need to take stock to assess their HR resources, practices, assets and liabilities. Focus must be on performance, productivity, engagement and results. Give employees the tools and support necessary for them to contribute and be successful in their roles. An engaged workforce will go a long way to compensate for the potential shortfall caused by the implementation of additional leave and vacation entitlements.
Employers with capable, dedicated and engaged workforces have little to fear from these reforms. For everyone else, the clock is ticking. Delay in making the necessary changes to reform, engage and empower your workforce will prove costly in the long run.
Terry Conley is the president of BBCi Performance Management Group. We are HR advisors to SMBs in Ontario.
You can email him at [email protected]