The large and belated increase in Ontario's minimum wage on Jan. 1 and the hiring of more investigators by the government to ensure employers aren't violating the law, are solely political moves designed to help the Liberals win this year's provincial election, says Toronto Employment Law lawyer Kevin Marshall. Under changes to the Employment Standards Act, 2000, the minimum wage was hiked from $11.60 to $14 an hour, but some businesses – including some Tim Hortons franchisees – eliminated paid breaks and raised the cost of benefits, since their parent company will not allow them to increase prices, CBC reports.
Following accounts of the franchisees' actions, Labour Minister Kevin Flynn – echoing earlier comments by Premier Kathleen Wynn – accused some businesses of being "bullies" by effectively clawing back the wage increase. The government also announced that it will hire up to 175 employment standards officers to boost enforcement in workplaces. "There's an election coming up, so the government stands to benefit if it can find villains that it can blame for 'bullying' the employees," Marshall states.
He explains that employers have three options when determining how to cover the roughly 21 per cent rise in their labour costs: reduce profits or run higher deficits; increase revenues by raising prices; or decrease expenses. "Normally, businesses like to be profitable, so usually they lean toward increasing revenues by raising prices or cutting expenses," Marshall says. But Tim Hortons franchiees "were in a bitter predicament" because the franchisor did not allow them to raise prices, noting that, other than labour costs, most expenses, such as rent, are fixed.
"Between the government and the franchisor, they tied the hands of the franchisees. The government and the franchisor now claim shock and horror – in most cases, they knew there would be fallout such as this. The whole thing is truly absurd on many different levels." Read more here.