On October 1, 2026, Ontario’s general minimum wage rises from $17.60 to $17.95 per hour, a 1.9% increase tied to the province’s Consumer Price Index. That’s the second highest rate among Canadian provinces. For most dental practices, the direct cost is modest because many hygienists, assistants and administrators already earn well above minimum wage. The more important issue may be wage compression: when the legal floor rises, employees above it can perceive that their own wage should rise too, to preserve the gap reflecting skill, responsibility, tenure and loyalty. Research documents these “spillover” effects, although they are generally strongest among lower-paid workers.
That matters because staffing is a major controllable expense in a dental office. An efficiently run general practice may spend about 25%–28% of collections on payroll, benefits and related costs. Dentists should be careful how they calculate their payroll expense: what exactly is the denominator (lower number) you’re dividing? Is it overall revenues (which often includes lab fees, which is typically a flow-through expense)? This approach would make the percentage smaller because you’re dividing by a larger number. What you really should be looking at is collections net of lab fees, which is truer / closer to your actual revenues coming in. This is what your team is generating and what’s available for distributions. Again: lab fees typically get charged and paid for by patients and no money is kept by the practice (unless they have their own in-house lab).
When calculating staff percentages, dentists should also normalize the numbers. The principal dentist’s compensation—and ordinarily associate-dentist compensation—should not be buried in staff wages. Nor should compensation paid to family members be included unless those people are working in the practice and being paid fair-market compensation for services. Otherwise, the payroll ratio can make a healthy practice look inefficient—or disguise personal distributions as operating expenses.
If salaries, wages, and benefits is over 35% for an established practice, you as the practice owner should start asking questions. Now we’re getting into challenges like the practice:
- may not be billing enough because it lacks sufficient active patients (i.e. number of unique patients that come each year to the practice for any kind of treatment and who have a history of coming)
- sends too many procedures to specialists that could appropriately be retained in-house
- underdiagnoses treatment
- has weak case acceptance
- scheduling inefficiencies, downtime, and / or cancellations
- poorly coordinated hygiene and doctor columns
- underutilized operatories
- too many expensive staff lunches or team building events
- large discretionary bonuses at the end of the year that aren’t tied to behavioural modification / goal achievement to increase productivity.
Any one of these challenges can suppress production while payroll stays fixed.
There is also a real labour-market problem. Statistics Canada reported that a whopping 82% of dentist offices experienced a staffing or human-resources challenge, and 64% identified difficulty recruiting skilled employees. The Canadian Dental Association has reported thousands of unfilled dental positions and shortages of assistants and hygienists. Those pressures, made worse after COVID-19, have strengthened employees’ negotiating position and pushed wages higher.
Finally, compensation pressure makes proper employment documentation more important, not less. Ontario’s Employment Standards Act (“ESA“) sets minimum termination requirements, while common-law exposure can be substantially higher. The ESA also contains continuity rules when a business is sold and employees continue with a purchaser. Proper, current employment agreements can help define compensation, duties, benefits, termination entitlements and expectations before a dispute or sale arises. Dentists should not simply download a template or ask an employee to sign a new agreement without considering enforceability, consideration and timing. Employment agreements should be reviewed strategically with experienced professionals, including lawyers who understand dental-practice transactions, such as the lawyers at DMC.
