As the debate continues over the potential impact of new labour reforms in Ontario, a fast-food operator has come under the spotlight for some of the changes it’s making to its benefits coverage and other workplace practices.
At issue are changes at two Tim Hortons outlets in Cobourg, Ont., which are owned by Ron Joyce Jr. and Jeri-Lyn Horton-Joyce, who are the children of the company’s co-founders. Details of the changes appeared in a letter — a copy of which the CBC has obtained and posted on its website — sent to employees of the Cobourg locations. The document, which requests a signature from employees, outlines the elimination of paid break times and decreases in the percentage of health benefits the employer will now cover.
The letter doesn’t outline the precise details of the benefits plan but it states that employees with five years of service will have to contribute 50 per cent to their health-care coverage. Those who have worked between six months and five years are to pay 75 per cent. An employee with more than five years of service told the CBC the employer previously paid 100 per cent.
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The letter noted that Ontario’s minimum wage hikes are to blame: “These changes are due to the increase of wages to $14.00 minimum wage on January 1, 2018, then $15.00 per hour on January 1, 2019, as well as the lack of assistance and financial help from our head office and from the government.”
For a nine-hour shift, the employer will now pay workers for eight hours and 20 minutes, the letter noted. For an eight hour shift, pay will be for seven hours and 30 minutes. The document also noted the elimination of a reward of a day off with pay for not calling in sick for six months, as well as unspecified incentives for working on an employee’s birthday. “Breaks will no longer be paid,” the letter noted.
Under Ontario’s Employment Standards Act, workers must receive 30 minutes of meal breaks for a five-hour shift, which they can take at once or they can split the time into two 15-minute periods. The act doesn’t, however, require employers to provide the breaks as paid time.
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A story by The Canadian Press on Wednesday noted some of the cost pressures Tim Hortons franchisees are facing, including what the Great White North Franchisee Association referred to as a lack of help from the parent company in lowering food costs and raising prices.
“While other competitors have received concessions from their franchisors, unfortunately our chain has not,” The Canadian Press quoted the association, which represents some Tim Hortons franchisees, as saying. “Many of our store owners are left no alternative but to implement cost-saving measures in order to survive.”
There’s no question that the new minimum wage is having a significant impact on small businesses and franchises, says Mike Macoun, a consultant at Accompass Inc. However, with a service franchise like a fast-food outlet, employers usually provide benefits only to the relatively small number of full-time workers, he says, noting cost-sharing arrangements are common in such situations.
A smaller business may also have a tougher time adjusting its benefits structure given the lack of resources such as a human resource department, he adds. “That’s why a broker or a consultant is brought in, but that comes with a cost as well,” says Macoun.
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The situation highlights the need for transparency between employers and employees, he adds. “It’s not like this has just come up. The mandate for the minimum wage has been ongoing. There’s been enough time to communicate,” he says, noting employers need to ensure employees understand the plan so they aren’t starting the communication process from scratch when changes arise.
The move by the Cobourg Tim Hortons locations comes as a slew of labour law reforms took effect in Ontario on Jan. 1, the impact of which is the subject of Benefits Canada‘s weekly online poll. Adding to the debate is a recent staff research note by the Bank of Canada that found coming minimum wage increases across Canada would cut real gross domestic product by 0.1 per cent by early 2019 and cost 60,000 jobs. Notable changes include Ontario’s boost to the minimum wage this week and a plan by Alberta to raise the rate to $15 per hour in October. Prince Edward Island will raise its minimum wage to $11.55 per hour in April, while Quebec will boost its raise to $11.75 in May.