Don't be caught out by minimum wage increases

The minimum wage for temporary foreign workers is rising on November 8, and if you are looking to recruit seasonal help for Christmas, this change will affect you.

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What is changing?

The Temporary Foreign Worker program has faced criticism in the past for worker mistreatment and for reducing the pool of jobs available to Canadian workers. Some have even blamed housing shortages and a higher cost of living and the program.

To counter this challenge, the federal government has announced that starting November 8, the minimum wage for temporary foreign workers will increase to 20% above the provincial median hourly wage. Temporary foreign workers in Ontario, for example, will see their earnings increase from $28.39 to $34.07 per hour.

The change will impact all employment contracts that begin on and after November 8. Existing contracts will be unaffected, but the increase is expected to take place at contract renewal. Therefore, if you have just onboarded temporary workers to bolster your workforce for the Christmas period but intend to renew their contracts in the new year, you will need to factor the increase in salary into your cash flow forecast.

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Why the changes are being implemented

Based on data sourced from Immigration, Refugees and Citizenship Canada, there has been an 88% increase in foreign workers entering the country between 2019 and 2023. Therefore, eligibility needed to be reassessed to ensure that native Canadians have access to work and are not disadvantaged by temporary foreign workers being willing to accept lower salaries and standards of living.

This wage increase is expected to be the first in a series of changes to tighten eligibility rules, with the aim being to limit the number of temporary foreign workers who are actively employed in the country. This may include imposing caps in some sectors and ending permits in areas that have high rates of unemployment.

The only certainty right now is that temporary foreign workers in the agricultural industry will not be affected by rule changes, as food security is deemed vital to national security and will be safeguarded.

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What this means for franchises

Franchise businesses that rely on temporary foreign workers, such as those operating seasonal franchises that typically hire foreign students during their busy periods, will need to reassess their needs and cash flow to ensure their existing modus operandi is still legal and affordable in the future.

Businesses may need to assess the work they offer and consider how they can attract local workers to their vacancies, reducing their reliance on temporary foreign workers. This may include implementing a new benefits package, increasing salaries, or offering retention allowances to encourage employee loyalty.

Some businesses will need to plan their workload more carefully, ensuring that they do not over-commit and that their planned workload can be accommodated by the workforce they have available.