Debate still rages over wages

Labour wants end to minimum wage differences, business wants more categories
By Sheila Brawn
|Canadian HR Reporter|Last Updated: 04/01/2016

What is fair when it comes to minimum wage? Not surprisingly, labour, business groups and governments have different perspectives on the issue.

One aspect of minimum wage that clearly shows the differences is whether all minimum wage workers in a province should be paid the same rate.

Debate around this issue has intensified in recent months with the Alberta government’s announcement it would eliminate a lower minimum wage rate for liquor servers on Oct. 1. Liquor servers are paid a lower rate because they can generally increase their earnings through tips. 

There will just be one minimum wage, according to Lori Sigurdson, former minister of jobs, skills, training and labour.

The government took the first step towards eliminating the wage differential in October when it raised the minimum wage for liquor servers by $1.50 from $9.20 to $10.70 per hour, putting it within 50 cents of the general minimum wage rate instead of $1.00. 

The government has said it plans to have one minimum wage rate of $15 an hour by 2018.

Social justice and labour organizations applauded the government for making the change. 

“We are glad to see the phasing-out of the lower-tier minimum wage for liquor servers, a policy we know disproportionately affected women,” says Sue Tomney, CEO of the YWCA of Calgary. 

A two-tiered minimum wage is a terrible idea, says Gil McGowan, president of the Alberta Federation of Labour (AFL).

“It’s a loophole that we’ve seen exploited and abused.”

The AFL says a separate, lower rate for liquor servers allows employers to take advantage of workers by classifying minimum wage earners as liquor servers even if they rarely serve alcohol. 

Business groups, however, want the decision reversed. Restaurants Canada, a national organization representing businesses in the restaurant and food service industry, has launched a campaign to get the government to pull back on the wage changes.

“The Alberta economy has taken a hard fall but the government hasn’t budged from its plan,” it says. “We’re asking the province to slow down the minimum wage increase, introduce a gateway wage for youth, and retain the liquor server wage, instead of putting even more jobs at risk.”

In an interview with the Calgary Herald in December, Premier Rachel Notley said her government is closely watching the state of the economy and will consider it when setting the pace of minimum wage changes.

When asked to confirm whether the government would go ahead with the Oct. 1 change, the premier’s media officer, John Archer, would only say, “Our plan has not changed, and we are continuously evaluating this phase-in to ensure it works for both employees and employers.”

Other provinces 

Alberta is not the only province with a lower wage rate for liquor servers. British Columbia and Ontario also have one. Quebec has a separate, lower minimum wage for tip-based workers in the hospitality industry, whether or not they serve liquor.

The BC Federation of Labour says it is actively campaigning for the government to eliminate its wage differentials and establish one minimum wage rate of $15 an hour for all workers. 

“Having different wage floors for different workers opens up the possibility for exploitation and discrimination,” says federation president Irene Lanzinger. “For example, a server who works mostly the breakfast shift but is sometimes scheduled for a lunch or evening shift, can be paid $9.20 an hour (the liquor server rate) even though they rarely serve liquor.” 

The tip-differential issue is also coming up in other provinces. In Nova Scotia, the province’s Minimum Wage Review Committee recently studied whether to recommend a separate minimum wage rate for employees who receive tips. The committee decided against it. 

The committee said it looked at a number of issues, including the age, gender and family status of tip earners and how a separate rate for tip-based employees could affect different types of workers. It said it also considered compliance rules and issues in other parts of the country.

In Manitoba, the government’s Labour Management Review Committee could not agree on minimum wage differentials last year when it presented its minimum wage report. The management-side members presented their own report, recommending the government implement a gratuity rate that would be 15 per cent less than the general minimum wage rate. 

The labour members on the committee opposed this, saying, “(M)any workplaces where tipping is the norm also institute a practice of ‘tipping out’, where servers’ tips are shared with back-of-the-house employees. Would those employees who are ‘tipped out’ also be paid a ‘gratuity wage’? Tips are unreliable, not guaranteed and vary according to workplace and shift and, therefore, should not be included in a worker’s minimum wage.” 

Not all minimum wage differences are for tip-based employees. Some jurisdictions have different minimum wage rates for other categories of workers. For instance, B.C. and Quebec allow employers to pay certain types of farm workers minimum piece rates.

Manitoba has a separate (higher) minimum wage rate for licensed security guards. 

Ontario also has different minimum wage rates for homeworkers, hunting and fishing guides, and students under 18 who work fewer than 28 hours a week when school is in. 

Ontario is the only Canadian jurisdiction that still has a student rate. Minimum wage differences based on age used to be more common in Canada but, according to the federal government’s Labour Program, many provinces eliminated them after Canada adopted the Charter of Rights and Freedoms in 1982, which prohibits discrimination based on age.

The Canadian Federation of Students has called on the Ontario government to eliminate the student rate, saying in a presentation, “There is no justification for the two-tier minimum wages. Young workers should be paid the same rate as everyone else, especially if the labour at the workplace is the same.”

To date, the Ontario government has not indicated it plans to eliminate the student minimum wage or any of its other wage differentials.

Training wages

Another type of minimum wage differential that is not common in Canada, but some business groups would like to see more of, is a training wage. Nova Scotia is the only jurisdiction that applies one. It allows employers to pay a lower minimum rate to “inexperienced” employees who have worked for their employer for fewer than three months and have less than three months of experience in the kind of work they were hired to do. 

While labour groups say a training wage is unfair and discriminatory, organizations such as the Canadian Federation of Independent Business (CFIB) and the Retail Council of Canada (RCC) want more governments to implement the wage. 

“(A)llowing small businesses to offer a slightly lower ‘training wage’ to new employees for three or six months... would recognize the investment that small businesses make in training new employees,” said the CFIB.

In a letter to the Alberta government, the RCC states, “Alberta should introduce a ‘First Job’ or training wage differential to encourage small businesses to continue to hire students looking for their first job so they can gain experience and move up the career ladder.”

In Manitoba, the management representatives on the government’s Labour Management Review Committee also like the idea of a student or training wage. While it admits some employers may take advantage of it and employ workers only for the period in which they can pay the lower rate, it says a wage differential can do more good than harm.

“Most employers genuinely desire an experienced and well-trained workforce, which generally is more productive and thus more profitable. Further, in the cases of unscrupulous employers, at least the employees will have gained valuable experience, which then makes them more employable elsewhere.”

Sheila Brawn is editor of Canadian Payroll Reporter, a sister publication to Canadian HR Reporter. For more information, visit www.payroll-reporter.com.

Add Comment

  • *
  • *
  • *
  • *