New Public Holiday Compensation Rules

Written on behalf of Peter McSherry

The Ontario Government has announced new, well make that old, rules on how an employer is to calculate compensation owed to a worker for a statutory holiday.

The Old-New Rule

The Government had previously introduced new rules as part of amendments to the Employment Standards Act which took effect on January 1, 2018.[1]

Under the formula which was then introduced, public holiday pay was based on the regular wages earned in the pay period prior to the public holiday, divided by the number of days worked in the relevant pay period.

The impact of this new calculation removed any proration to an employee’s holiday pay based on the amount of time the employee had in fact worked in this qualifying period. This resulted in a higher holiday pay obligation for many companies, noticeably for part time workers.

Back to the Future

That formula has now been rescinded and the former calculation in effect prior to January 1, 2018 has been reinstated effective July 1, 2018.[2]

This formula is based on the sum earned in the four-week period prior to the relevant holiday, divided by 20 days. A person who worked full time for this four-week period would receive one day’s pay for the holiday. Similarly, a person who worked half time in this period would receive a half day’s pay for the holiday.

The apparent distinction between the two concepts is that the “new” law used the number of days worked as the qualifier whereas the “old” law uses 20 days in the prior 4-week period.

The new law is intended as a stop gap measure pending a further review.

Under the same law, an employer maintains the right to substitute an alternative day for the public holiday.

An Open Mind?

This change may be welcome for opponents of the new law, which includes a pending increase to the minimum wage rate from $14 to $15 as of January 1, 2019. This has become an active part of the platform of the new Progressive Conservative leader in the present political debate.

Vacation Pay

On a related subject, the new law also increases vacation pay to three weeks after 5 years of service.[3] Bonus and commission payments must also include a vacation pay gross-up, barring a written document which describes such payments as inclusive of vacation pay, which is rare.

On termination of employment, vacation pay must be calculated not only to the date of termination but also on the minimum notice period. This is basically one week[4] per year of service to a cap of 8 weeks. These sums must be based on all income, not simply base pay.

This issue may have greater repercussions when examining a termination clause in an employment agreement, which requires full compliance with Ontario’s minimum standards to be enforceable.

Let Legal Advice Shine Some Light

The issue of compensation for public holidays and vacation pay is not as simple as one might expect. Legal advice can help you understand the intricacies of these issues. Keep in mind that there is a limitation period of two years to consider after which your rights will be gone.

If you have questions about these thorny matters contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position if needed. Contact us online or by phone at 519-821-5465 to schedule a consultation

[1] By the Fair Workplaces, Better Jobs Act, Bill 148

[2] Ontario Regulation 375/18 – in effect through to December 31, 2019

[3] It is two weeks prior to 5 years service.

[4] It is actually on week after 3 months, two weeks after two years service and one week for each full year thereafter to a maximum of 8. This is not to be confused with severance pay which has no vacation pay gross-up.