To offset minimum wage hike, several Tim Hortons franchises owned by children of chain's co-founder reduce employee benefits

Nationally, Bank of Canada estimates 60,000 jobs will be lost due to pay increases across the country
Tim Hortons

Employees at the Tim Hortons locations owned by the children of the co-founders of the franchise say they have reduced employee benefits and cut back paid breaks to help offset Ontario's $2.40 jump in hourly minimum wage.

Jeri Horton-Joyce and Ron Joyce Jr. wrote a letter to employees at their two Tim Hortons restaurants in Cobourg, Ont., that those who want to continue receiving dental and health benefits will have to pay a portion of the plan's costs themselves. Those working at the restaurant for more than five years will have to pay half, while those working from more than six months to five years will pay 75 per cent.

Employee breaks will also no longer be compensated, the letter dated December 2017 read. For example, those working nine-hour shifts will be paid for eight hours and 20 minutes, while those on three-hour blocks will be paid for two hours and 45 minutes.

"We apologize for these changes," the letter, widely circulated on social media, read. "Once the costs of the future are better known we may bring back some or all of the benefits we have had to remove."

A spokeswoman for the Great White North Franchisee Association, a group created last year to give voice to the concerns of some Tim Hortons franchisees, confirmed that the couple penned it.

The cutback in benefits and wages at their two locations, which came into effect Jan. 1, follow the rise in Ontario's minimum wage from $11.60 an hour to $14 this week. The couple also wrote that the changes come in anticipation of another $1 bump at the start of 2019.

The owners also pointed to "the lack of assistance and financial help from our head office and government" in the letter and said their decision follows "intense discussions with management and numerous small business owners in the area and other franchise owners."

A Tim Hortons spokesperson declined to comment on the couple's statement, but said franchisees are responsible for handling all employment matters, including benefits and wages, at their restaurants while complying with all applicable laws and regulations.

"Our focus continues to be on supporting our restaurant owners by growing sales and profitability through a balanced and multifaceted strategy while ensuring we provide our guests with great experiences," the spokesperson said in an emailed statement.

None of the changes contravene Ontario's Employment Standards Act, which requires employers to give workers a 30-minute eating period – or two shorter breaks that add up to 30 minutes, if the employee agrees – if a shift lasts more than five consecutive hours. These do not have to be paid.

Additional breaks only have to be paid if the employee is required to stay on premises, said an Ontario Ministry of Labour spokeswoman. A nurse who must stay in a hospital lounge during his or her break, for example, would have to be paid, she said.

The minimum wage hike and other new franchisee costs, like vacation pay, have put Tim Hortons franchisees in "a difficult situation," said a statement from the GWNFA's board of directors.

The GWNFA, whose membership hit half of all Canadian Tim Hortons franchisees last October, said its goal is to mitigate job losses.

But without help from their parent company in lowering food costs, raising prices and reducing couponing, the association said franchisees have been forced to take steps to protect their business.

"While other competitors have received concessions from their franchisors, unfortunately our chain has not," the GWNFA said. "Many of our store owners are left no alternative but to implement cost-saving measures in order to survive."

Bank of Canada estimates 60,000 fewer jobs due to minimum wage increases

The Bank of Canada estimates there will be about 60,000 fewer jobs by 2019 due to the increases in minimum wages across the country, but that labour income will be higher due to the increases.

In examining the impact of the wage increases, the report estimated that the consumer price index could be boosted by about 0.1 percentage points on average and real gross domestic product could be cut by 0.1 per cent by early 2019.

The number of jobs lost was based on a 0.3 per cent decline in the number of hours worked, while aggregate real wages were estimated to increase 0.7 per cent.

The research paper by the staff at the central bank noted that if the average working hours declined following the increase in the minimum wage, the number of jobs lost would also be lower.

The Bank of Canada estimated that about eight per cent of all employees work at minimum wage, a proportion that increases to 11 per cent if a threshold of five per cent above minimum wage is used.

Ontario raised its minimum wage to $14 per hour on Jan. 1 from $11.60 and plans to increase it to $15 in 2019, while Alberta is expected to raise its minimum wage to $15 later this year.