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How Labour Law Changes Will Affect the Job Market and Personal Debt

14 August 2017

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Many changes to Ontario’s labour and employment laws have recently been announced by Kathleen Wynne’s Liberal government.

It is important to consider how these changes will affect the economy, and the direct and indirect effects of these changes on your financial situation.


Minimum Wage Increases

The Ontario Liberal government recently announced legislative changes that will raise the minimum wage from $11.40/hour to $14.00/hour by the beginning of 2018, and to $15.00/hour by the beginning of 2019.


If you or a partner with whom you split expenses are earning at or near minimum wage, this naturally sounds like a huge relief. A wage increase of even $2.00/hour means an extra $80.00/week on a full-time, 40-hour work week. This is not insignificant. It is enough to pay off a typical phone bill, or to pay down $320.00/month in existing credit card debt.


On the other hand, such drastic change to the minimum wage could mean that companies will review their processes, have more incentive to replace humans with technology, attempt to become leaner, and lay off staff, hire fewer staff or reduce workers’ hours.


So, the minimum wage increase could have mixed effects. It could be fantastic for budgeting purposes and paying down your credit card debt if your employment is secure. Or, the stability of your employment may be weakened by this change and you may be best suited to use your extra income to create a fund to rely on in the event of unexpected unemployment.


Vacation Time, Sick Days and Emergency Leave

Under the new laws, minimum paid vacation will increase from two to three weeks. Further, employers will be required to grant employees 10 family emergency days per year, two of them paid. Currently, employers are not required to pay employees for leave days in relation to family emergencies.


Again, this immediately seems positive. An extra week of paid vacation time per year equates to an extra $560 for someone who will be making the minimum wage as of January 1, 2018. Two paid family emergency days equates to an extra $224. Although these numbers may not seem incredibly significant, this extra bit of cash can send you well on your way to reducing any credit card debt and reducing the amount of interest payable on your debt.


The new laws also require more advanced notice to shift workers regrading shift cancellation, lest the company be required to pay the employee for three hours of work. For workers, this change represents more fairness.


On the other hand, employers faced with a workforce full of employees taking more vacation, and with greater rights in respect of their work schedule, could be encourage to change their business model. For example, the company may take on more staff and reduce hours to create a “pool” of employees who can be called upon in emergencies, or to fill in for absent employees on a regular basis. Although your wage may increase, the nature of your work and number of hours may change, depending on the type of work you are involved in.


Changing Workplaces Review

The Ministry of Labour recently completed a comprehensive, independent review in Canada regarding how to strategically change elements of labour and employment law based on changes that have been occurring in the workplace and economy over time. The 419-page Changing Workplaces Review report calls for changes to the Employment Standards Act and Labour Relations Act, which includes some of the items discussed above (though not the issue of minimum wage).


Other items include paying an equal rate of pay for part-time as full-time staff, ensuring it is feasible for employees to unionize, and preventing employers from inappropriately try to classify workers who seem to be employees as independent contractors.


Although the report is very much focused on improving rights for employees and improving employees’ ability to assert their rights, there may be unintended consequences. As above, employers will get the sense that they will be faced with drastically increased costs as the result of the multitude of legislative changes. As such, companies may begin to strategize about how to eliminate jobs, enhance technology to replace certain work currently performed by humans, and/or reduce employees’ hours.


As such, although there appears to be a bright future for the enhancement of employee rights, employers may still control how much you are able to work, and may eliminate jobs to control costs. As above, you must be ready for anything, including more competition from other job seekers who are offering more skills. Although the proposed reforms to Ontario’s employment and labour legislation reflect progress for workers, it is conceivable that businesses put under more pressure will feel constrained in their ability to invest in human and physical capital needed for the province’s long-term prosperity. Employers will do everything in their power to protect the company’s revenue, even where this strategy is short sighted.


If you are laid off and you have already been struggling to budget or you are carrying student loan or credit card debt, panic may ensue. It is wise to build an emergency fund with some of the extra money that you earn in the event of job loss.


If You Are Struggling with Debt, Contact a Licensed Insolvency Trustee

If you are carrying credit card or other debt, and are at the same time trying to get by on a minimum wage salary, living on a budget can feel nearly impossible. A lack of certainty as to your job stability can make this more stressful. Contact a Licensed Insolvency Trustee in Ontario from Harris & Partners today. If you are concerned about your ability to manage your debt, contact us to arrange your free consultation with an experienced licensed insolvency trustee. Don’t delay. Call us at 1-800-268-8093 today. We have offices in Toronto, Oshawa, Markham, and across Southern Ontario.