Toronto restaurant owner Monte Wan has spent weeks preparing for the impact of new workplace laws that take effect across Ontario on Jan. 1 – and which bring higher wages for his staff and higher prices on his menu.

The moves come after the Ontario government recently passed legislation to increase the minimum wage by 20.7 per cent to $14 an hour, alongside other workplace requirements around scheduling, equal pay and vacation time.

While the government and worker advocates say the legislation will protect vulnerable employees and boost spending power for those who earn the minimum wage, some small-business owners say the increase in costs leaves them little choice but to raise prices to the consumer. Business owners also say they may have to cut hours or reduce staff to compensate for increased labour expenses.

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For many business owners like Mr. Wan, it's the sudden spike in the minimum wage that will have the biggest and most immediate impact. Mr. Wan says the increase is forcing him to raise his restaurant prices by about 7 per cent, on an average dish that costs about $15.

"I am very scared," says Mr. Wan, owner of both the Khao San Road and Nana restaurants in downtown Toronto. "I believe it will impact sales – they will drop – and I think it will impact the way customers tip. If the bill is higher they may tip a little less. Over all, I think it will be very challenging and not beneficial to the wage earner."

He's also concerned about the morale and motivation of more experienced employees who were already making more than minimum wage before the legislation kicked in.

"They worked hard to get where they are. It's like their hard work didn't pay off," Mr. Wan says. He is considering giving them a small bump up in pay, but says he can't afford to pay all of them the additional 20.7 per cent that minimum-wage workers will receive.

Meantime, the owners of Howe Family Farms, near Aylmer, Ont., are planning to give workers making above minimum wage a similar 20-per-cent increase in 2018.

"It's not fair to them to not have the same pay increase," says Kevin Howe, who runs the farm with his brother and father. The farm grows strawberries, watermelons, pumpkins and squash, most of which is sold to local supermarkets.

The pay raise is also a way for the owners to retain loyal, long-standing employees who also help to manage the farm. "The more management that you have who are pulling in the same direction as the operation, it makes things a lot smoother and a lot less stress on myself, my dad and my brother," Mr. Howe says.

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To help cover the higher wages, the farmers are planning to charge more for their fruits and vegetables and have been negotiating with supermarkets on how to pass those costs on to consumers.

Mr. Howe is already anticipating some consumers won't pay extra for the local produce. As a result, they plan to reduce their overall crop size by about a third this year. "We expect a decrease in demand," Mr. Howe says. "We are pre-emptively forecasting that."

The minimum wage will rise again to $15 on Jan. 1, 2019, as part of the legislation passed in Ontario in the fall.

The industry isn't against a higher wage, says Shanna Munro, president and chief executive officer of Restaurants Canada, which represents Canada's restaurant and food service industry. "Our concern as an industry is that the very people we aim to help, we are going to hurt," Ms. Munro says. "If people don't have jobs or they have [fewer] hours, what's the impact of that?"

But unions and other worker advocates say business owners are too focused on how the new legislation hurts them, and not enough on the benefits.

"They talk about the cost, they don't talk about the benefit of working people having more money in their pockets," says Rob Halpin, executive director of the Ontario Federation of Labour (OFL). "What do they do with that additional money? They go and spend it in their communities."

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The labour reforms also requires that employers pay part-time, casual and temporary employees the same rate as full-time employees for the same job; that employers pay workers three hours' wages for shifts cancelled with fewer than 48 hours of notice; and that all workers be eligible for 10 days of emergency leave, two of which must be paid. (There are exceptions in some industries.)

"It will raise the standards for all workers, not just those making minimum wage," Mr. Halpin says.

The OFL plans to launch a marketing campaign in the New Year to educate both workers and employers about the changes. "Even the best-intentioned employers aren't always aware of what their rights and obligations are," Mr. Halpin says.