On May 7, 2018, the Ontario government issued a new regulation under the Employment Standards Act, 2000 (the “ESA”) that will reverse the changes made to the calculation of public holiday pay that were recently enacted under Bill 148, the Fair Workplaces, Better Jobs Act, 2017. Beginning July 1, 2018, the public holiday pay formula will revert back to the formula in effect before Bill 148.
Pursuant to the recent Bill 148 amendment to the ESA, which came into effect on January 1, 2018, public holiday pay is equal to the sum of all wages earned in an employee’s previous pay period, divided by the number of days worked in that period. In contrast, under the new regulation public holiday pay will be equal to the total amount of regular wages earned and vacation pay payable to the employee in the four weeks before the work week in which the public holiday occurred, divided by 20. This new formula will be familiar to most employers, given that it is the same as the one that was in effect prior to the enactment of Bill 148. The new regulation will come into effect on July 1, 2018 and will be in force until December 31, 2019. Public holiday pay accrued between January 1, 2018 and July 1, 2018 must therefore still be calculated in accordance with the formula that was introduced by Bill 148.
While the holiday pay formula is changing, employers should note that this new regulation does not affect the Bill 148 amendment requiring employers to provide employees who agree to work on a public holiday and receive a substitute day off with a written statement confirming the agreement.
Bill 148 was enacted after a comprehensive review of the province’s labour and employment legislation found that the existing public holiday pay rules were a large source of complaints under the ESA and needed to be simplified. As a result, the new formula was included in Bill 148. However, subsequent discussions and feedback from stakeholders revealed that small business owners find the new public holiday calculations confusing and many are opposed to the increases in public holiday pay that casual and some part-time workers receive under Bill 148. For example, if a casual worker worked only one day in a month before a holiday and it fell in the pay period preceding that holiday, then the worker would be entitled to a full day of wages under the formula that was included in Bill 148. In contrast, pursuant to the previous formula to which the government is reverting, a worker in these circumstances would only be entitled to 1/20 of a days’ wage.
Employers argued that the increased costs resulting from the increase in public holiday pay for casual and some part-time workers discouraged some employers from hiring those workers and disproportionately impacts employers who rely on them. This industry pressure led the government to roll back the Bill 148 change to the public holiday pay formula. Employers should note that the government has indicated that this reversion to the old formula is only an interim measure, and that it intends to implement a new public holiday pay system by December 31, 2019. However, it remains to be seen how this plan may be impacted by the upcoming provincial election.
This blog is provided as information and a summary of workplace legal issues.
This information is not intended as legal advice.