A new federal minimum wage of $15 per hour applicable to federally regulated employees1 in the private sector was included in the Budget Implementation Act, 2021, No. 1. The new wage rate will take effect on December 29, 2021.
Presently, the Canada Labour Code (CLC) requires federally regulated employers—i.e., those subject to the CLC’s employment standards—to pay each employee the minimum wage of the province where the employee is usually employed. Accordingly, if the employer has employees doing the same job in different provinces, they may pay them different minimum wages.
As of December 29, 2021, federally regulated employees may not be paid less than $15 per hour. However, if the minimum wage in the province where the employee is usually employed is higher than $15 per hour, the employee must be paid the higher provincial minimum wage.
These changes may impact the federally regulated employer’s overall compensation liability, including its liability for amounts tied to an employee’s hourly rate (e.g., vacation pay, overtime, incentives), and its deductions at source.2 Furthermore, if a federally regulated employer uses a progressive scale to pay its employees, an increase of its minimum wage may necessitate an increase in the hourly wage of all employees. Finally, federally regulated employers should consider whether the new minimum wage may require a revision of their pay equity plans.
Bottom Line for Employers
To prepare for their compliance with the change to the federal minimum wage as of December 29, 2021, as well as its potential financial and other impacts, federally regulated private sector employers are encouraged to determine which of their employees are earning an hourly wage less than $15.
1 For clarity, this does not apply to employees subject to provincial jurisdiction (i.e., approximately 90% of Canada’s workforce). Sectors regulated by the federal government include, but are not limited to, air transportation, banks, interprovincial rail transportation, radio and television broadcasting, road transportation services, and telecommunications.
2 This refers to the portion of pay an employer is legally required to withhold from its employees' paychecks and remit to the Canada Revenue Agency on their behalf.