Ontario Minimum Wage Increase Announced: The HR Perspective

There may be chaos reigning over the world, but there’s some good news for certain Canadians. Starting October 1, a minimum wage increase is expected to go into effect in Ontario. The Ontario wage hike in 2025 involves a small hike from $17.20 to $17.60 in the province. 

While the margin of increase in the new wage rates in Ontario is minimal, when calculated over a period of time, it should make a difference to the take-home pay for workers. Those who earn minimum wage and work 40 hours a week will see their annual pay increase by up to $835 shortly. 

Interestingly, Manitoba and Nova Scotia are also increasing the minimum wage, and Canada’s overall federal wage rate has also gone up in April. Any wage changes, no matter how big or small, are important for HR leaders to acknowledge and account for, so here’s everything you need to know about the increase.

Ontario’s minimum wage changes will require businesses and their HR teams to prepare for the upcoming rates comprehensively so they aren’t taken by surprise by the repercussions later down the line. (Image: Pexels)

Ontario Minimum Wage Increases by 40 Cent: What You Need to Know

The minimum wage in Ontario is scheduled to go up starting October 1, 2025. The minimum wage will increase from $17.20 to $17.60 an hour. The Employment Standards Act in Ontario plays a fundamental role in overseeing the working conditions in the region, ensuring the minimum standards for employment and fairness within the workplace. The framework provided by the act has been credited for Ontario’s minimum wage increase.

The rate for the Ontario wages of $17.60 per hour has been determined on the basis of the Ontario Consumer Price Index (CPI) of 2.4%. The CPI is a measure of inflation, which reflects the changes in prices of goods and services experienced by consumers in Ontario. 

The index tracks the cost of living and allows for the wage rate to be adjusted accordingly. Linking the minimum wage to the CPI allows the government to provide workers and businesses with fair and predictable wage adjustments without making any dramatic alterations that might upset the balance. 

Manitoba and Nova Scotia are also increasing the minimum wage rates later in the year. In Manitoba, the minimum wage will go up from $15.80 to $16, and in Nova Scotia, the base pay will go up from $15.70 to $16.50 by October 1.

What Does the Ontario Wage Hike in 2025 Mean for Workers?

Ontario’s new wage rate of $17.60 per hour will make it the second highest provincial rate in Canada, second to Nunavut, which offers the highest minimum wage in the country at $19.00 per hour. Over the last 7 years, Ontario’s minimum wage has consistently increased, going up from $14 per hour. 

According to the fact sheet, the new wage rates in Ontario will primarily affect workers in retail and food services. Around 36% of workers earning $17.60 per hour or below work in retail, and 24% work in food services. These workers could see an annual pay increase of up to $835, which should help them keep up with the rising cost of living a little more easily. 

While higher wages mean better living conditions for workers, there is also the risk of job cuts. Employers in the retail and food service sector may choose to bring down the number of employees to keep the costs unchanged, which could have a negative consequence on workers.

New Minimum Wage in Canada Overall

While the Ontario minimum wage increase is heartening for locals, the federal minimum wage is also going up for workers in federally regulated private sectors. Canada has announced a 2.4% increase to $17.75 per hour as of April 1, 2025. As a result of the increase, workers in federally regulated private sectors will also be able to better keep up with the increases in the year-over-year cost of living.

What the Ontario Minimum Wage Increase Means for HR

The Ontario minimum wage of $17.60 per hour is a good step forward for citizens making the minimum wage, however, there are many aspects of the change for HR to consider. With a change in wage rates, employers will have to make payroll adjustments to accommodate the change for all affected employees. 

Additionally, the wage increases across Canada in 2025 will mean that HR teams will need to have a clear understanding of what applies to their workers and when adjustments should be made. The right changes must be tracked and enforced.

HR Teams Need to Keep Track of Regulation

Employees will often turn to HR to explain the changes in regulation to them, and these HR teams will have to be able to guide the workers correctly. Any misinformation or delayed response in making the changes will reflect poorly on the organization. HR teams need to ensure payrolls, job descriptions and offers, contracts, and all other records are updated in time. 

HR Leaders Should Consider How Ontario’s Minimum Wage Increase Affects Employees

Workers earning minimum wage are often at a disadvantage compared to those with higher wages, and these minimal increases don’t always help keep up with the cost of living for everyone. Reports from 2023 suggest that individuals need to earn a minimum of $25 per hour to live comfortably in the region, so HR leaders need to reflect on whether they can offer employees a more liveable wage. 

Assess What Impact the New Minimum Wage Will Have On Hiring Capacity

When an employer has to pay multiple employees a higher wage, even if the difference is small, it can collectively add up to a big amount. Employers and HR teams will have to assess how Ontario’s new wage rate will affect their finances moving forward and make tough decisions on how many employees they can retain. Some organizations may choose to pass on the cost to customers.

HR Needs to Stay Prepared for Other Financial Threats

Ontario’s wage of $17.60 per hour is expected to put a small amount of pressure on employers, but it is also important to consider the fact that there are tariffs and other export issues that might affect the business overall. 

Employers need to stay vigilant for all the changes occurring in their industry and prepare their HR team to dive deeper into human capital management to ensure that they are prepared for what’s to come.

HR Teams Need to Reconsider Wages for Other Employees 

While minimum wage workers will obviously see a boost in their wages, organizations need to explore how it will affect other roles. Other existing employees who already earn as much may also want to see a boost in wages. Similarly, while hiring new workers, the organization may have to offer workers a slightly higher wage than the minimum to make it appealing, which could affect their overall expenses.

The new minimum wage in Canada overall, and Ontario specifically, will require HR teams to carefully consider the ways that the upcoming changes will affect the business and the employees in equal measure before responding accordingly. These wage changes are not exclusive to Ontario and can occur in any region, making it important for HR leaders to learn from the experiences of other organizations faced with these issues and prepare for the same eventuality.

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