05 Feb When must an employer give a pay raise in Ontario?
As an employer, you are constantly adapting to new trends in the market and keeping your employees happy. One of the most complex decisions in an employer-employee relationship is knowing when to provide a raise. As an employer in the current economy, you may not be able to afford as many raises as you would like, but when does avoiding the topic become detrimental?
It may become challenging to know whether a raise is necessary, especially when your employees are demanding a pay raise because they completed professional development training, they know their position is making more in the current market, the cost of living has increased, they expanded their family, they feel their performance does not match their pay, etc.
If your employee is demanding a raise, or even if the market is demonstrating wage increases, employers are still not legally obligated to provide a pay raise. The decision to increase an employee’s pay is completely up to the employer. In Ontario, there are only two mandatory reasons an employer must provide a raise – if the minimum wage increases or if the employee’s Employment Agreement demands for a pay raise.
When should an employer provide a raise?
An employer’s goal is often to retain the most skilled employees in the market. If you are matching wages that are presented in the market, there is a better chance you will hire a skilled team. If employees are hearing that the pay for their position has increased in the market, they will have an incentive to leave your company and start somewhere else that is willing to pay more. If you want to hire top-tier employees and maintain long-lasting relationships with current employees, it is important to do your research and know what positions have appreciated in value.
An employer should consider increasing an employee’s pay if their responsibilities have expanded. If the employee has been working on more projects, has upgraded their skills, or they have naturally progressed into managing a bigger workload, they may deserve more pay. Evaluate how much the employee has improved, their performance, and their workload to assess whether their current pay aligns with their enhanced proficiencies.
You can offer a raise as a reward for an employee’s performance. If your employee has been doing extremely well, their efforts may warrant a raise. Offering a hard-working employee positive reinforcement to continue their excellent work may be worth it, as it can be impactful for the employee to feel like their efforts aren’t going unnoticed.
You may want to keep your most trusted employees. If you have developed a strong team that has been devoted to your company, you don’t want to lose the community you have built over resisting pay increases. Even if employees have been committed to your company for a long time, they can still leave if they feel like their value isn’t being appreciated. Don’t make the mistake of taking your team for granted.
If you are an employer who needs guidance on whether your employees deserve more pay, or you want to include terms for pay raises in your future Employment Agreements, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.