The rules for compensating employees can be complex and can vary among jurisdictions
Which employees are entitled to be paid for a statutory holiday? Can employers require employees to work on a holiday? How much should employers pay employees who work on a holiday?
These are some of the questions that payroll departments have to answer when statutory holidays appear on the calendar. With Good Friday, Victoria Day and Canada Day on the horizon, payroll practitioners will be dealing with statutory holidays a lot in the coming weeks.
The question of payment for work on a statutory holiday is often a challenging issue for payroll. Statutory holiday pay is regulated under employment standards laws in all Canadian jurisdictions. In many cases, the rules are similar, but they are not always identical. Employers with employees in more than one province or territory have to be aware of the rules in each jurisdiction.
Theodora Lindsey, a consultant with the Carswell Payroll Consulting Group in Toronto, says, “There are so many different rules in each jurisdiction and I find that it’s very confusing for our clients to know what their options are.”
Applying the rules properly is crucial for payroll. Few issues upset employees more than not being paid properly for their work. “You have to be compliant with employment standards. Even though it’s complaints driven, employees have their rights. They are protected and you have to at least be making sure you are following the minimums,” Lindsey says. If an employee files a complaint, she says, “Employment Standards comes in to see everything about how you’re doing in compliance.” The inspectors will look at more than just statutory holiday pay, she adds. “It could open a Pandora’s box.”
Correctly following the rules can also be good for employee relations. “If you keep paying them wrong or they have to keep coming (to see you) every time there is a stat holiday because you don’t know how to calculate a stat holiday or you don’t know what they are entitled to, employee morale would fall down a bit with that,” she says.
Lindsey adds that employees may be less likely to volunteer to work on a statutory holiday. “They are not going to do it if they keep having problems or issues every time.”
One of the key factors in determining how much to pay for work on a holiday is knowing whether the employee is entitled to statutory holiday pay for the day. The minimum standards for paying employees who work on a statutory holiday are different for employees who are entitled to statutory holiday pay than for those who are not. “That’s the first thing you want to know before you determine what you are going to do,” Lindsey says. “It’s different in every jurisdiction.”
Depending on the jurisdiction, some employees will not be entitled to a paid statutory holiday because they are in a type of work that is exempted from employment standards law. Most employees, however, will be entitled if they meet the jurisdiction’s eligibility criteria for the holiday.
Most provinces and territories require that employees work for their employer for a minimum period before they are eligible for statutory holiday pay. The most common timeframe is 30 calendar days. In addition, some provinces require that employees work or earn wages on at least 15 of the 30-calendar days right before the holiday in order to qualify for statutory holiday pay.
In other provinces, such as Ontario and Manitoba, all employees covered by employment standards legislation qualify to be paid for a statutory holiday unless they do not work their regularly scheduled shift on the day before and after the holiday without good reason. To further complicate matters, even in provinces that mandate a minimum work period to qualify, these requirements can also apply.
If an employee who does not qualify for statutory holiday pay works on a holiday, employment standards law in some jurisdictions requires that the employer pay the employee his regular rate for the hours worked. This applies in Alberta and British Columbia, for example.
In other jurisdictions, including New Brunswick and Ontario, employers must pay these employees 1.5 times their regular rate for hours worked on a statutory holiday.
If an employee who qualifies for statutory holiday pay works on a holiday, all Canadian jurisdictions require that employers pay them statutory holiday pay and an additional amount for the hours worked on the holiday.
The elements that make up statutory holiday pay can vary depending on the jurisdiction. Some stipulate that it consist of an employee’s regular daily wages. Others specify that statutory holiday pay be based on an employee’s average daily wage over a certain period of time.
In Alberta, for example, an employee’s daily wage is averaged over the days the employee worked in the nine weeks right before the holiday. In British Columbia, an average day’s pay is calculated by dividing the total wages an employee earned in the 30-calendar days before the holiday by the number of days worked.
In Ontario, statutory holiday pay is calculated by adding up the regular wages the employee earned in the four workweeks before the holiday and the vacation pay payable to an employee in those weeks and dividing the sum by 20. The four-week period is based on the employer’s workweek, not necessarily a calendar week.
When calculating the amount to pay entitled employees for the hours actually worked on a holiday, employers have to be aware of the legal requirements. “In some jurisdictions, you pay regular rate for the hours worked plus (give) an additional day off for the stat or pay them time and a half for the hours worked plus payment for the stat. Some jurisdictions have choices and some jurisdictions dictate what you owe if they work it,” Lindsey says.
Most provinces and territories require that employers pay 1.5 times an employee’s regular rate for each hour worked (with exceptions for employees in continuous operations such as hotels or hospitals). Not all jurisdictions follow this rule, though.
British Columbia specifies that the 1.5 premium applies for the first 12 hours worked on a holiday. For any hours beyond that, employers must pay double the employee’s regular rate. In Newfoundland and Labrador, employers must pay entitled employees at least double their regular rate for hours worked on the holiday or give them another day off or an extra vacation day. It is the employee’s choice.
In Ontario, employers can pay entitled employees their regular wages for the hours worked plus provide a day off with pay at a later date or, if the employees agree, employers can pay statutory holiday pay plus 1.5 times the employees’ regular rate for the hours worked.
Paying regular wages for the hours worked and offering another day off for the holiday is something that other jurisdictions also allow. Employers have to be careful, though, because some jurisdictions limit this option to employers in continuous operations.
Paying employees for working on a statutory holiday can be further complicated by shift work and overtime requirements. Lindsey says she fields many calls on Carswell’s payroll hotline asking about how to compensate an employee whose shift begins the day before a holiday and ends on the holiday.
She says she receives even more calls about overtime calculations in a week in which there is a holiday. “Some jurisdictions reduce their workweek when a stat holiday occurs, like the Canada Labour Code. For a 40-hour week, they reduce it by eight hours so overtime is calculated after 32. If you work the stat holiday, that day is not even included in your weekly overtime calculation,” Lindsey says. Other jurisdictions include the hours worked on the holiday when calculating weekly overtime.
To learn about the specific requirements for statutory holidays, Lindsey advises that payroll practitioners refer to the employment standards law in their jurisdiction. If understanding statutory holidays in order to comply with the law is not motivation enough, Lindsey says payroll workers should also consider how not doing it right could affect their workload.
“You don’t want (employees) coming to your office every stat holiday and asking, ‘Did you calculate it correctly this time? Did you include overtime in the calculation?’” Lindsey adds, “You don’t want to have to be paying lump-sum amounts for owing stat pay that you didn’t calculate properly or didn’t know what the requirements were.”
