Ontario is all set to implement minimum wage increases on June 1st of this year. With only four months of lead-time, businesses haven’t had a lot of time to prepare for these minimum wage increases. Prepared or not, businesses must begin paying employees at the new rate as soon as the new law takes effect. If you’re not prepared already, it’s time to start putting serious effort into getting ready. While these minimum wage increases aren’t huge, they can have a huge impact on businesses that have a lot of employees. Even small businesses will feel the pinch from higher wages and taxes. The five steps below can help you prepare, and stay prepared, for these and future minimum wage increases.
Before you can determine what you will be paying employees, you need a complete record of what you’re currently paying them. You need to know how many hours they’re working, and which minimum wage applies to them. You probably already know what you’re spending on payroll, but you’ll still need to break it down to individual employees. There are several minimum wages depending on the employee’s job and status. If you have employees that work varying hours, the calculations will be even more difficult. To know what you’ll be spending after the minimum wage increases, you’ll need to crunch the numbers for each and every employee.
Determine Additional Wages
Once you’ve crunched the numbers, you can calculate how much more you’ll be paying after the minimum wage increases. For many employees, this will be a simple math problem. Multiply their current hours by the current minimum wage, then subtract that number from their expected hours multiplied by the new minimum wage. As long as they have fixed, predictable hours, the numbers aren’t hard to figure out. If you have employees that work variable schedules, or who work different hours during different times of the year, then the math gets quite a bit harder. It may come down to figuring out an average, and making a best guess as to the overall change.
Calculate Additional Taxes
Of course, the minimum wage increases also bring an increase in taxes. You’ll need to have your payroll department ready to begin withholding and remitting more taxes from your employees’ paycheques. As wages increase, so do payroll taxes, and it’s your responsibility to adjust to the new calculations. Like the current payroll calculations, if you get them wrong, there are serious legal consequences. You’ll need to make sure that the changes are accurate for each employee, and that you’re ready to implement the changes on June 1st.
Prepare for the Future
Pay attention to the process as you’re going through it, and make notes of any difficulties you have along the way. Ontario is proposing tying future minimum wage increases to inflation, so you may end up doing this every year. While they’re promising more lead-time, you’ll still have to spend time and effort preparing for annual increases. You can save yourself some aggravation by learning from your mistakes along the way.
Get Help From a Pro
Of course, you can save yourself a lot more aggravation by letting a professional payroll service handle the minimum wage increases for you. They can quickly and efficiently perform all of the necessary steps to prepare for the change, without taking up your time or disrupting your business. They have the experience, personnel, and equipment to roll out the wage increases accurately and on time. With their help, you won’t have to worry about whether you’ve missed something that could attract the CRA.