How To Handle The Minimum Wage Increase Coming To Ontario In October?

By Athina Iliadis

Sr. HR Consultant

The minimum wage is going up in Ontario. While the change may seem small, it carries important implications for employers across the province. HR teams and business leaders must act now to ensure payroll systems, employment contracts, and communication plans are updated in time. 

Below, our HR experts will answer common questions business owners have about the minimum wage increase and provide you with a checklist for how to manage the changes. 

What will the Ontario minimum wage be in 2025?

Starting October 1, 2025, the Ontario government is increasing the minimum wage from $17.20 to $17.60. This is a 40-cent per hour increase. Rates are in effect from October 1, 2025, to September 30, 2026. The wage increase is mandatory, and all employers must comply with these updates to avoid legal risks. 

Why is the minimum wage going up in Ontario?

Aligned with the Ontario Consumer Price Index (CPI), this adjustment reflects the province’s established framework for annual minimum wage increases. The 2.4% CPI-based adjustment will raise Ontario’s minimum wage to the second-highest provincial rate in Canada.

A checklist for handling the minimum wage increase 

Here is a list of steps all Ontario businesses some work through to ensure they are compliant with the new minimum wage rates. 

1. Confirm the New Minimum Wage Effective Date: Verify the date it takes effect (pay period). Share updates with leadership and HR teams so everyone is aligned.
2. Review Employee Pay Rates: Identify all employees currently earning below or near the new minimum wage. Adjust pay to meet or exceed the new legal minimum. Ensure wage changes are entered into payroll systems on time.
3. Assess Pay Compression Risks: Review employees just above the new minimum wage to see if adjustments are needed to maintain fair pay differentials. Consider impacts on supervisors, senior staff, or experienced employees who may now earn close to entry-level wages.
4. Update Payroll Systems & Schedules: Program the new rates into payroll software. Double-check effective dates to avoid errors. Review overtime, holiday pay, and premium pay calculations, as they may be affected.
5. Review Employment Contracts & Policies: Update offer letters, job postings, and employment contracts where wage information is included. Ensure employee handbooks, policies, and onboarding materials reflect the changes.
6. Communicate with Employees: Prepare clear communications (emails, team meetings, pay stub notes) explaining the wage increase. Emphasize compliance and your commitment to fair pay. Train managers on how to address questions from staff.
7. Evaluate Budget Impact: Forecast the financial impact of higher wages across departments. Explore efficiency improvements to help offset costs if needed.
8. Check for Ripple Effects on Benefits & Perks: Review whether wage increases affect eligibility for bonuses, benefits, or retirement contributions (if tied to earnings). Update benefit calculations as necessary.
9. Plan for Future Adjustments: Ontario's minimum wage is reviewed annually. Set a reminder to monitor changes each year. Build regular wage reviews into HR processes to stay proactive.

Does the minimum wage increase apply to all employees?

The minimum wage increase applies to most workers in the province. This includes:

• Full-time employees
• Part-time employees
• Casual workers
• Commission-based workers
• Piece-rate workers
• Flat-rate or salaried employees

There are a few types of workers for whom the minimum wage rate is different. This includes students ($16.60), homeworkers and wilderness guides. 

How much will the minimum wage increase affect your payroll?

According to the Government of Ontario, “A worker making the general minimum wage and working 40 hours per week will see an annual pay increase of up to $835.00 as a result of these changes.”

For companies, this will be relatively straightforward to determine. Simply multiply $835 by the number of employees currently making minimum wage. For example, if you had 10 employees making minimum wage, your increased payroll costs would be $8,350 annually. 

However, more complex considerations and calculations will need to be made to accommodate other employees who may be in line for a raise.

What industries will be impacted most by the minimum wage increase in Ontario?

The Government of Ontario estimates that about 36% of workers at or below the wage of $17.60 per hour are in retail trade, and 24% are in accommodation and food services. Companies that operate in these industries are expected to be the most impacted by the wage increase. These industries alone account for about 60% of employees who will see an increase in October. 

A final word on the 2025 Ontario minimum wage increase 

The upcoming minimum wage increase in Ontario is a significant change that will affect many employers and industries across the province. By preparing now, employers can stay compliant while supporting fair and competitive wages. With annual adjustments tied to the Consumer Price Index, building proactive wage review processes into your HR practices will help ensure your organization remains prepared for future changes. 

Reach out to AugmentHR if you require payroll and benefits services or if you want to ensure you are in compliance with new wage rates in Ontario.