Upcoming changes to public holiday pay in Ontario

08 May 2018

In a move that addresses a key concern of employers following recent changes to Ontario's Employment Standards Act, 2000 (the "Act"), the Ontario Ministry of Labour has announced that it is reinstating the former public holiday pay calculation beginning on July 1, 2018.  The government has also announced that it will undertake a review of public holiday rules.

On November 27, 2017, the Fair Workplaces, Better Jobs Act, 2017 (commonly known as Bill 148) received Royal Assent. This legislation introduced sweeping changes to the Act, such as new and increased leaves of absence, new on-call pay and scheduling requirements and enhanced pay equity provisions. Bill 148 also changed the manner in which holiday pay is calculated by employers, which had a particularly positive effect on part-time and casual employees.

Prior to January 1, 2018, public holiday pay was calculated by taking the total amount of regular wages earned and vacation pay payable to an employee in the four work weeks prior to the work week in which the public holiday occurred, divided by 20 (or some other manner of calculation, if prescribed). Bill 148 changed this calculation to the total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days an employee worked in that period (or again some other manner of calculation, if prescribed).

To give an example of how this affected employers' payrolls, suppose that an employee earns $15.00 an hour and works 3 shifts per week of 8 hours each for a total of 24 hours per week.

Under the previous calculation, the employee would have been entitled to:

  • $360.00 per week * 4 weeks = $1,440.00 / 20 days = $72.00 (plus vacation pay payable)

This calculation would be consistent with the proportional amount of pay a part-time employee would receive compared to a full-time employee (i.e. 60% of a full-time workload).

Under the revised Bill 148 calculation, the same employee is entitled to the following (assuming a pay period of two weeks):

  • $360.00 per week * 2 weeks = $720.00 / 6 days worked in the pay period = $120.00 (plus vacation pay payable)

This revised calculation meant that a part-time or casual employee could be entitled to the same amount of public holiday pay as a full-time employee. This created a significant expense for employers, and created a disincentive for employers to engage part-time or casual employees due to increased labour costs.

On May 7, 2018, however, the Ministry of Labour announced that the Province will conduct a review of the new public holiday pay system under the Act this year following discussions with stakeholders. Until a new formula is enacted, the government is enacting Ontario Regulation 375/18, which effectively restores the previous formula for public holiday pay. This change will come into force on July 1, 2018 but is only in effect until December 31, 2019. Therefore, it remains uncertain at this point what the public holiday pay calculation will be in the future.

Gowling WLG will continue to keep its clients informed of any further developments. If you have any questions about this regulation or how it impacts your workplace, please contact a member of the Employment, Labour and Equalities Group.

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