The news has been filled with stories about certain Tim Hortons franchises reducing employee benefits and no longer paying employees for their breaks. What these franchises have done is a shock to many, especially so to their employees. Despite this media storm, what these franchises have done is completely legal and complies with the Ontario’s Employment Standards Act (ESA). Within the ESA, employers must provide employees with:
- A 30-minute unpaid eating period after no more than 5 hours of consecutive work (unless an employment contract requires payment). This break can be split if the employee agrees. This break is not considered working time under the Employment Standards Act.
- Additional breaks (ex. coffee breaks) are only paid breaks if the employee is required to stay on premises.
- Employers are not required to provide benefit plans. If they do, they must comply with the rules against discrimination under the ESA.
Two of the Tim Hortons franchises mentioned in this CP24 report are owned by the children of the co-founders of the franchise. These owners have provided a letter to employees outlining the following changes, all of which fall in accordance to all current laws and regulations but have still upset many of their employees:
- Dental and Health Plan Changes/Reductions
- 6 months to 5 years employed: 25% coverage
- 5+ years employed: 50% coverage
- Breaks are no longer compensated (3 hour shifts will be paid for 2 hours and 45 minutes work)
These franchise owners claim that they have implemented these changes to offset the costs that they will be subject to with the new wage increase that was effective as of January 1st, and that they will further evaluate these changes once all costs are known and the minimum wage is increased again in 2019. They have said that they “may bring back some or all of the benefits [they] have had to remove.”
The franchise owners assert that these changes are necessary to prevent layoffs at the restaurants. Some organizations, researchers, and government officials have been warning that layoffs will be the result of the increases to minimum wage since it is not being phased in over a significant amount of time. With little “assistance and financial help from head office… like not lowering food costs, raising prices and reducing couponing… franchises have been forced to take steps to protect their business” which has affected employment. If franchise owners cannot control the price of their goods they will take steps to curtail their costs in areas they can control such as benefits and wages.
It must be noted however, that many economists believe that the changes to the ESA, specifically the minimum wage hike, will be a positive for the economy. They believe that more income for the estimated 8% of Canadians who work for minimum wage means more money to be spent by those employees which in turn will fuel the economy as a whole.
How these changes will play out is unknown. For now, employers must ensure that they are compliant with these changes and put themselves in a position to succeed until the repercussions of the ESA amendments are truly understood.