Employment and Labour Law Blog: Important Changes to the Calculation of Public Holiday Pay

The Employment Standards Act, 2000, was amended on January 1, 2018 to include a number of substantial changes, including changes to the holiday pay provisions of the Act.

The amendments introduced a new formula for calculating public holiday pay.  Under these changes public holiday pay is to be calculated based on the total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days the employee worked in that period.  The effect of the amendment is that all employees, whether full or part time, will be entitled to holiday pay equal to one days’ pay.

However, the new calculation had a number of unforeseen impacts.  For example, part time employees started to receive more vacation pay than before even though the employee was working the same number of part-time hours.  Employees who received commission payments in the week before the holiday would be entitled to public holiday pay based upon the entirety of the commission payment.  In one situation that a very large commission payment translated to thousands of dollars in public holiday pay. 

The Ontario government responded to these concerns on May 7 with a new regulation which provides for a review of the issue, and re-introduces the previous public holiday pay formula on a temporary basis commencing in time for the July 1st holiday.

The effect of the revision is that:

·         The new Bill 148 formula (above) will apply to the Victoria Day Holiday, 2018.

·         The previous public holiday pay formula will apply effective the Canada Day Holiday (July 1) and will continue in effect until December 31, 2019, subject to further amendments.

Public Holiday Pay for Canada Day, 2018 should be calculated in accordance with the following:  the regular wages earned in a four week period, divided by 20.  Full-time employees will therefore receive 1 days’ pay.  Part-time employees, or employees with an irregular schedule will receive a pro-rated amount based upon their actual earnings.

These changes will have the greatest effect on part-time employees, and those who have variable pay and/or commission structures.  In light of the vast publicity around Bill 148, employers should consider a communication to employees to advise about the changes to the calculation of Public Holiday pay.

Employers who have collective agreements in place will of course be required to comply with their agreements if it diverges from the Act.

Submissions regarding the Public Holiday Pay Review can be sent to:  exemptions.review@ontario.ca

We will keep you posted on any further changes.