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In order to ensure that workers get paid a fair wage, the government sets a legal minimum threshold which the employer must meet. Adjusting on a provincial and territorial basis, this is to account for the cost of living in the area. As of 2019, 38,780 people reside in Nunavut, meaning the job market is challenging in this province. It only separated from the Northwest Territories in 1999. While it has grown since this time, it remains the least populated part of the country.
Relative to other Canadian locations, Nunavut has a more restrictive supply chain due to geographical limitations. It also has less infrastructure, and reduced opportunity for employment within the territorial economy. This raises the cost of goods, and thus the cost of living in Nunavut. As such, a minimum wage must make living affordable for everyone.
Due to the increase in cost of living, as assessed by the Consumer Price Index, Nunavut saw a massive increase in its minimum wage on April 1, 2020. The hourly minimum increased from $13.00 to $16.00. The wage is reassessed every April, though the results of the assessment, including a potential increase, are not yet available. The $16.00 remains in effect in Nunavut during 2021.
Who Does It Apply To?
Any employee in the territory of Nunavut is required to receive the minimum wage of $16.00 per hour for all worked hours. There is no age restriction on the minimum wage, meaning it applies across the board, whether the worker is a student or of the age of minority.
While the minimum wage applies to the vast majority of positions, there are exemptions. This threshold does not apply to trappers or workers at commercial fisheries. If the worker is a student in certain professions, not regulated by the Act legislating the minimum wage, then the worker is exempt.
In the case of fisheries and trapping, if an employer supplies lodging or board, they are entitled to deduct this from the amount paid. According to the Nunavut government website, sectors including traditional harvesting and fisheries constitute a substantial amount of the economic output of the territory. As such, the minimum wage doesn’t apply to a significant portion of the population.
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Nunavut is a relatively new independent territory, so its history of minimum wage settings is relatively short. Additionally, since the cost of living across the country has increased at an accelerated rate since the turn of the century, the jumps in the minimum wage are noticeable.
|Year||Hourly Minimum Wage|
|March 3, 2003||$8.50|
|September 5, 2008||$10|
|January 1, 2011||$11|
|March 2, 2016||$13|
|April 1, 2020||$16|
Overtime is determined by a daily and weekly maximum of hours worked. Each day, the employee is entitled to overtime if their time worked exceeds eight hours. The threshold for the week is 40 hours. These are deemed standard work hours and, if they are exceeded, the worker is entitled to overtime.
Maximum work hours are set as well, in the event the employer requires or allows a worker to go into overtime, there is a cap on the duration. The employee can work a total of ten hours in a day and 60 hours in a week. There are available exceptions to this, depending on the employment situation. To access this exception, however, a permit must be issued by the Labour Standards Officer.
If the employee enters overtime, the remainder of the hours worked are paid out at 150 percent, meaning the hourly rate is $24.00 per hour. This rate only applies to the hours worked in overtime, and not to the total time worked in the pay period.
Holidays are termed as any recognized holiday that falls within the worker’s period of employment. Pay for these holidays is determined by the wage of the worker. If they are not working on that day, due to the holiday, then the worker is entitled to a shift’s worth of pay. This is determined by the average of the previous week’s days worked.
If the employee works during a holiday, then there are two options. The employer can pay the full shift at an overtime rate (1.5 times the wage) or choose to give a holiday at an agreed upon time between the worker and the boss. The day must be taken prior to annual vacation and will constitute a general holiday. It is often called a day in lieu.
Minimum Wage Deductions
Wage deductions are fairly straightforward, largely because they are standardized across the country. Employers are restricted as to what they can deduct from your pay cheque.
generally explain what can be deducted from your wages. This is governed under the Labour Standards Act which prohibits an employer from making unjust deductions. It specifies that, if there is a supplemental deduction, it must be authorized in writing by the employee.
Standard deductions include:
Canada Pension Plan (CPP) Contributions
The Canada Pension Plan is a federal program into which every Canadian is obligated to pay. The amount of 4.95% of the gross earnings (less $3,500 annually) is taken from every paycheck. Your wage is calculated for an annual amount. From there, $3,500 exempted expense is deducted. You pay 4.95% of the remainder, divided up by paycheque. This funds those currently receiving pensions and is meant to be held for those currently contributing, enabling them access to funds upon retirement.
Employment Insurance (EI) Premium
Another essential premium is Employment Insurance into which both the employer and employee pay. The contribution rate is 1.58 percent, to a maximum insurable amount of $56,300. The worker pays a maximum annual contribution of $889.54.
The next, and easily the most substantial, standard deduction is income tax. This is broken into territorial and federal amounts. The 2021 federal tax rate is at 15% for the first $49,020 earned. A minimum wage job rings in at a gross annual earning of approximately $33,280, meaning it would be taxed at this rate federally. Territorial tax is a separate deduction, also withdrawn from each pay cheque. In Nunavut, during 2021, the first $46,740 is taxed at a rate of 4%.
Learn more about the tax forms that your employer requires you to fill out.
Extending from court-ordered garnishees due to alimony to matters of child support or insolvency, any legally valid deduction will be taken from your cheque. It is the legal obligation of the employer to deduct this amount and forward it correctly, pursuant to the court order.
Let’s say you work the regular 40 hour work week at the minimum wage of $16.00. Assuming there are no holidays during this given week and no overtime worked, this is how the pay would appear:
Gross Pay: $16.00 x 40 hours = $640
CPP: ($16.00 x 40 x 52 = $33,280 annually)
Subtract the $3,500 exception = $29,780
Divided by 52 weeks to determine weekly deduction = $572.69
$572.69 CPP taxable x CPP rate of 4.95% = $28.34
EI: Rate of 1.58 %
$640 x 1.58 percent = $10.11
This will not exceed the cap for EI, so will remain in force for those on minimum wage.
Federal Income Tax: Rate of 15% for minimum wage, less the $12,421 basic personal amount.
So, taking your annual gross estimate of $33,280 – $12,421 = annual taxable amount of $20,859. This is then divided into increments, in this case, weekly.
$20,859 taxable income / 52 pay periods = $401.13 taxable per pay period
$401.13 x 15% = $60.17 Federal Income Tax Deduction
Territorial Income Tax: Rate of 4% for minimum wage, less the basic personal amount of $16, 467. By taking your annual gross pay of $33,280 – $16, 467 = annual territorially taxable amount of $16, 813. As with the federal pay, this is then divided by the payment increments.
$16,813 taxable income / 52 pay periods = $323.33 taxable amount per pay period.
$323.33 x 4% = $12.93 Territorial Income Tax Deduction
Gross Pay: $640
Net Pay: $528.93
This assumes that there are no separate garnishees on the account. It also assumes that the employee is paid weekly at minimum wage, without overtime. Any amount that is overpaid during the course of the working year is issued in the form of an income tax refund at the end of the year.
Nunavut has the lowest territorial income tax, limiting the amount that is deducted from the paycheque. It assists those working on minimum wage above the cost of living. Other ways to bridge the gap caused by the standardized federal amount include the Nunavut Northern Allowance. This can help provide a way to help those bearing the added cost of living in these areas, particularly if the worker relies on minimum wage.
Nunavut has the highest minimum wage in Canada as well as the lowest provincial or territorial tax rate. Broken into categories of food, transportation, utilities, leisure, childcare, clothing, and housing, the cost of living in Nunavut is high in each category. It is particularly noticeable in the realm of rental costs, considering a one bedroom in the city runs $2,566 per month. Childcare costs a similar amount on a monthly basis in addition to the higher food prices in the province due to supply chain logistics.
In order to offer the best possible opportunity for workers, minimum wage is an essential tool. When used in conjunction with the other services available to residents, living in this territory is far easier. Understanding your rights as a worker, including your right to minimum wage, is essential to ensuring that the workforce is properly compensated. This facilitates a strong economy; which, over the long term, has the potential to reduce the cost of living in this area.
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