Canada’s Minimum Wage: A Guide to Understanding Wages and Benefits

27 of December, 2022

Knowing the minimum wage in Canada, as well as the history and provincial and territorial variations, is essential. It is very important to understand this subject as an employer but also as an employee.

It’s also important to understand living wage rates, common benefits included in the minimum wage, overtime and holiday pay. This guide unpacks the basics of understanding wages and benefits in the Canadian context.

Let’s dig into it so you can have a better understanding of this matter. This way, you will be able to manage the payroll of your company the right way. 

What is the minimum wage in Canada?

The minimum wage in Canada is the lowest rate that an employer can legally pay an employee for their work. It’s important to note that the minimum wage can vary from province to province and territory to territory.

The Canadian federal government does not have a national minimum wage but does have a standard for the provinces and territories to follow.

The provinces and territories determine the current minimum wage in Canada, which can range from $10.45 in Alberta to $14.00 in Nunavut. While the provinces and territories determine the minimum wage, the federal government does have a role in setting the standard.

The Canada Labour Code establishes the minimum wage for certain federally regulated industries, such as banking and telecommunications.

It’s also important to note that, while the minimum wage can vary across provinces and territories, the same rules apply to all employees in Canada. This includes the right to receive overtime pay, holiday pay, and other benefits.

History of the minimum wage in Canada

In 1918, Ontario passed the first minimum wage law in Canada, setting the minimum wage for women at $11 per week. In 1925, this law was extended to men. Since then, all provinces and territories have passed minimum wage laws and regularly updated them.

In the 1970s, the federal government began to set the minimum wage for employees in federally regulated industries.

In 1974, the provincial and territorial governments agreed to establish a minimum wage that would apply to all employees in Canada. The Canada Labour Code formalized this agreement in 1983.

The federal government has ensured that the provinces and territories adjust their minimum wages regularly to keep up with inflation and the cost of living.

Provincial and territorial minimum wage rates

Each province and territory sets its minimum wage rates, which can vary from province to province or territory to territory.

The minimum wage also varies depending on the type of work. For example, in Alberta, the minimum wage rate for servers is $11.20. In British Columbia, the minimum wage rate for farm workers is $13.85.

It’s important to note that the minimum wage rate can also vary depending on the age of the employee. In Alberta, employers must pay employees under the age of 18 a minimum wage rate of $9.45.

Understanding living wage rates

The living wage rate is the minimum wage rate necessary to meet basic needs, such as food, housing, transportation, and other necessities. It’s important to note that the living wage rate is different than the minimum wage rate. It takes into account the cost of living in a particular area.

The living wage rate is typically higher than the minimum wage rate and can vary from province to province or territory to territory. For example, the living wage rate in Alberta is $18.15, while the rate in Nunavut is $21.00.

We must note that not all employers must pay their employees a living wage rate. However, many employers do choose to do so to attract and retain quality employees.

Common benefits included in the minimum wage

In Canada, employees are entitled to certain benefits in addition to the minimum wage. It’s important to note that the minimum wage rate does not include the cost of these benefits. Employers must pay these benefits in addition to the minimum wage.

Overtime pay is the amount of extra pay that an employee is entitled to when they work more than the normal hours of work. In Canada, overtime pay is 1.5 times the regular rate of pay.

Holiday pay is the amount of extra pay that an employee is entitled to when they work on a holiday. In Canada, holiday pay is 1.5 times the regular rate of pay.

In addition to overtime and holiday pay, employees in Canada are also entitled to other benefits, such as vacation pay and sick leave.

Vacation pay is the amount of extra pay that an employee is entitled to when they take a vacation. In Canada, vacation pay is 4% of the employee’s gross wages.

Sick leave is the amount of extra pay that an employee is entitled to when they take time off due to illness. In Canada, sick leave is unpaid, but employers may choose to provide paid sick leave.

Understanding overtime and holiday pay

It’s important to note that overtime and holiday pay are not mandatory in all provinces and territories. Some provinces and territories do not require employers to pay overtime or holiday pay.

It’s important to check the laws in your province or territory to see if overtime and holiday pay is required.

Conclusion

The minimum wage in Canada is the lowest rate that an employer can legally pay an employee for their work. It’s also important to understand the living wage rate, common benefits included in the minimum wage, overtime and holiday pay, and wage discrimination in Canada.

By understanding the basics of wages and benefits in Canada, you can ensure that you are being paid fairly for your work. If there seems to be a lot of information at once, it is because there truly is. You can simplify the management and control of the documents of your company by using Sesame HR.

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