Despite an ageing population, the labour force in Ontario continues to grow, meaning that, every day, young Canadians join the workforce. Since our largest province, and home to the Capitol, has 1.9 million youth, they will quickly make up a large portion of the labour market. Despite a socialized education system, many youths enter the workforce with little information on their rights and responsibilities. A key piece of knowledge, one that can prevent young workers from getting taken advantage of, is the legal minimum wage.
What Is The Current Minimum Wage In Ontario?
In Ontario, the minimum wage is $16.55 per hour (effective October 01, 2023). While, historically, the minimum wage has increased in increments, each step forward took a lot of time (and wasn’t necessarily consistent with inflation). To address this, Ontario’s minimum wage is indexed to CPI inflation.
What Is A Minimum Wage?
Let’s talk about the background of minimum wage, Ontario first introduced the legislation in 1918. Currently, there is a federal minimum wage that dictates the least amount a worker can be paid for an hour. While there are some exceptions to the rule, this applies regardless of whether you are a casual worker, full, or part-time. It applies to all forms of payment including commission, flat rate, hourly, salary, or otherwise compensated (ex: piece work).
However, because of economic discrepancies between provinces, the minimum wage figure changes each time you cross a border.
Wondering how much you’ll be taxed? Check out the tax rates by province.
Exceptions To Ontario’s Minimum Wage
While there are quite a few rules without exceptions, Ontario’s minimum wage isn’t one of them. There are several exemptions to the minimum wage; so, before you agree to a work gig, make sure you are familiar with your rights.
If you’re a federal worker in Canada, including Ontario, the minimum wage starting April 1, 2023, is $16.65 per hour. This is the minimum wage for workers who are federally regulated by the government, such as federal Crown corporations, banks, postal workers, and interprovincial transportation. Non-federally regulated employees are only entitled to the provincial minimum wage.
Student Minimum Wage
Youth ought to be particularly wary of this caveat. It means that students who are less than 18 years old and work fewer than 28 hours weekly have a minimum wage of $15.60 per hour. This applies whether the student is working during break or while on holiday. The legal age to leave school in Ontario; which, while not necessarily advisable, is 18. In essence, this minimum wage rule means that if you are underage, you get a lower minimum wage.
Hunting and Fishing Guides Minimum Wage
As opposed to an hourly payment approach, hunting and fishing professionals get paid based on the overall time invested in the project. If the worker spends fewer than five hours consecutively during a day, they get a flat rate of $82.85. If the hunting or fishing guide works for more than five hours (whether back-to-back) or separately, they receive a flat rate of $165.75. This equates to roughly ten hours, so if you get the job done in seven hours, it’s a profitable arrangement.
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Wilderness Guides Minimum Wage
Wilderness guiding applies to a whole host of activities from taking you in a hot air balloon to sherpa-ing you up a mountainside. Economically similar to a hunting and fishing guide, these workers fall under the same NOC code, though there are restrictions in terms of age requirements. The flat rate is the same as the previous category, at $77.60 to $82.85 per day for fewer than five consecutive hours or $155.25 to $165.75 per day for more than five hours, spread out or not. However, these standards don’t apply to those under 18 who work fewer than 28 hours weekly. In that situation, the compensation is according to student minimum wages.
One of the examples of a higher minimum wage than the baseline provincial minimum wage is homeworkers — those who work out of their own home. The hourly minimum in this situation is $18.20 an hour. Since these are employees of a company who use their own infrastructure to perform work tasks, the extra accounts for the added wear and tear on equipment. From laptops to office chairs to dedicating a portion of the home as an office, it saves the company overhead costs, and the minimum wage compensates the worker.
Do you use your home as an office? Then you can claim these home office expenses for taxes.
Different than an hourly worker, this is a common situation for salespeople. A common phrase in the industry is “minimum wage against commission”. Basically, it means that you must be paid at least the minimum wage equivalent for your time. However, if you earn a commission that exceeds that amount the employer only has to pay you that sum. Essentially, it’s an either-or situation.
Do you have a low income? Check out these tax tips for low-income earners.
The 3-Hour Rule
Knowing this rule is essential to ensuring you get the largest paycheque possible. It applies to staff who usually work more than three hours in a shift. If workers are called into work for fewer than three hours, they must be paid for a full three hours. There are two approaches to payment and the worker is entitled to the higher of the two:
- Regular pay rate: The worker is paid for the full three hours (whether they worked only ten minutes or just under three hours).
- Rate plus tips: If the employee is in the service industry, they are entitled to any earned tips in addition to the full three hours’ pay.
This regulation recently expanded to include students (of any age), though there are exemptions. If the student works at a children’s camp or recreational program, it does not apply unless they are also a wilderness guide of some sort. The three-hour rule is also inapplicable if the employee leaves before three hours due to circumstances beyond the control of the employer (illness, family emergency, etc.). It also doesn’t apply if the worker is casual and usually has shifts shorter than three hours.
The Effect Of Room And Board On Minimum Wages In Ontario
Room and board have long been exchanged for wages. Essentially, it deducts the cost of providing that room (utilities, food, etc.) and board (living arrangement) from the wages. As labour laws evolve, the standards for deductions against a paycheque have become increasingly regulated. This is meant to both provide fair compensation for the employer and to ensure that the staff is fairly paid.
Is your income not enough to cover your needs? Find out if you qualify for the Canada Workers Benefit.
The standards are as follows:
- Private rooms cost $31.70 every week, and a shared or ‘non-private arrangement is $15.85 per week. These rules, however, only apply to non-domestic (foreign workers). The amount is set to zero for non-private living arrangements for domestic workers.
- Capping out at $53.55 per week, each meal can be charged to the worker at rates up to $2.55.
- Room and board come with weekly costs of $85.25 for a private room and $69.40 for a non-private foreign worker. The non-private room for domestic workers rings in at $53.55 (the cost of food).
- Those providing harvest services, also called seasonal workers, pay a weekly housing fee of $99.35 for a serviced home and $73.30 for an unserviced location.
To learn more about how these rates apply to your situation, consult Ontario.ca. Make sure you know your rights and potential recourse before you enter into a work agreement, especially if it overlaps with your housing situation.
Are you missing a paycheque cause your employer declared bankruptcy? Then you may qualify for the wage earner protection program.
Ontario Minimum Wage And Taxes
When you start a new job, you fill out both provincial and federal tax forms. These are used to calculate the tax deduction withdrawn from your paycheque. Legal deductions include Employment Insurance, union dues, Canada Pension Plan costs; and, of course, income tax. This is remitted by your employer and held by the government until you file your taxes.
Depending on how much you earn during the year, you can either get a refund or end up owing. In the majority of cases, so long as you pay tax as you go, you will end up with a return (due to grants and benefits) if you work at minimum wage.
Here’s what you can do if you owe taxes to the CRA.
This amount is levied based on the total amount of taxable earnings you made over the year. It depends on how many hours you worked. You must pay both federal and provincial taxes. The federal amount is set at 15% and Ontario income tax is set to 5.05%.
Basic Personal Amount
This number refers to the amount you can make before being charged any income tax. For the 2024 tax year, it is set to $15,705. It increases each year according to the consumer price index. If you work at the $16.55 minimum wage for a 40-hour work week, taking only two weeks paid vacation, you will earn a gross amount of $34,424.
Real-World Tax Example
If you make $32,240 a year, you’d pay $1,828 in federal taxes and $300 in provincial taxes only thanks to the basic personal amount. So your net salary will be $25,746.
Credits and Deductions: In addition to the basic personal amount deduction, there are other ways to drastically reduce your tax burden. First, let’s talk about tax credits. These are either refundable or non-refundable.
- Childcare costs
- Age amount
- Common-law or spousal amount
- Medical expenses
- Canada workers benefit
- Educational expenses
Save all of your receipts during the year and ensure that you take advantage of every tax deduction possible. It will either reduce your taxable income or offer a refundable benefit (meaning it is paid to you). It is your legal responsibility to file your taxes every year, but you owe it to yourself to make the most out of the process.
The world is an economic jungle, and to survive, you need to know your rights and recourse options in the workplace. Understanding the ins and outs of minimum wage is essential to maximizing your earnings. After all, the minimum wage is a starting point, not a cap. According to Ontario Living Wage, it takes at least $18.05 to live securely in the province — so there’s still a way to go. Whether you’re just entering the workforce or have years under your belt, know your value and defend your rights as a worker, including the entitlement to a minimum wage.