Understanding Holiday Pay Ontario: 8 Comprehensive Steps Towards Compliant Payroll

Ontario’s laws about holiday pay can seem tricky. But don’t fret. Our all-encompassing guide will help you navigate everything you need to know. Whether you’re an employer looking to pay your team correctly or an employee trying to understand your pay, this article is for you.

We’ll discuss Ontario’s public holidays, eligibility for stat holiday pay, and how to calculate holiday pay in Ontario. Don’t want to do the calculations yourself?

Check out our free online stat holiday calculator today. Otherwise, Let’s dive in.

What is Holiday Pay Ontario?

Holiday pay is a distinct income type that employers in Ontario are obligated to provide their employees during officially designated public holidays. This assumes employees meet the eligibility criteria which we’ll delve into later in this guide. On these statutory holidays, employers have two key responsibilities:

1. Permit employees to take the day off, and
2. Grant additional remuneration known as “holiday pay.”

Remember, this applies only to statutory holidays—those days officially recognized as public holidays by the provincial government. Not all holidays fall into this category. For instance, employers may choose to treat Remembrance Day or Easter Monday as holidays, but there’s no legislation mandating them to do so.

Ontario’s Statutory Holidays

As of now, Ontario recognizes nine public holidays:

1. New Year’s Day (January 1)
2. Family Day (third Monday of February)
3. Good Friday (the Friday before Easter Sunday)
4. Victoria Day (the Monday preceding May 25)
5. Canada Day (July 1)
6. Labour Day (the first Monday of September)
7. Thanksgiving Day (the second Monday of October)
8. Christmas Day (December 25)
9. Boxing Day (December 26)

For any changes or updates to Ontario’s public holiday list, refer to the official ESA guidelines here.

Eligibility Criteria for Holiday Pay Ontario

Determining an employee’s eligibility for holiday pay depends on two main factors:

1. Whether your industry is governed by the ESA or any special rules, and
2. Whether the “last and first rule” is applicable to the employee.

The vast majority of Ontario’s employees are covered by the ESA. However, certain industries are exempt, and some roles may be subject to special rules. To verify if your industry is exempt or is governed by special rules, refer to ESA’s official guide on exemptions and special rules.

If your industry is not exempt, the next step is to ascertain if the employee meets the requirements outlined in the “last and first rule.”

The “Last and First Rule” Explained

According to this rule, an employee won’t qualify for public holiday pay if they, without justifiable cause, either:

1. Fail to work their entire last scheduled day before the public holiday, or
2. Don’t work their whole first scheduled day after the public holiday, or
3. Don’t work their entire shift on the public holiday, if they had agreed or were required to work during it.

There are some key points to remember regarding this rule:

1. Even if an employee doesn’t qualify for holiday pay, they are still entitled to premium pay for any hours worked during the holiday.
2. All types of employees can qualify: full-time, part-time, permanent, or contract.
3. The “last scheduled” day in the “last and first” rule doesn’t necessarily have to be the day immediately before the holiday, and the “first scheduled” day doesn’t have to be the day right after the holiday.
4. “Reasonable cause” for not attending work must be beyond the employee’s control. It is the employee’s responsibility to provide evidence that they had a valid reason to miss work if they wish to qualify for holiday pay.

Calculating Holiday Pay Ontario

Before using any holiday pay calculator, just as with payroll, it’s beneficial to understand how the calculation is executed.

First, determine your typical workweek schedule. For example, in some industries, the work week runs from Monday to Sunday. However, your business may have a unique schedule, perhaps with Tuesday being the first day and Monday the last day of the work week.

Once you understand your business’s work week, examine the previous four work weeks leading up to the week of the public holiday. The calculation is straightforward: sum all of the wages earned (including vacation pay) by the employee in those four work weeks prior to the holiday, and divide the total by 20. This will yield the public holiday pay amount.

Once you’re familiar with the underlying principles, you can use a public holiday calculator, like the one offered by PayEvo. Click to use our free online stat holiday calculator.

Considering Vacation in the Holiday Pay Calculation

There are three scenarios when dealing with statutory holiday pay and vacation pay:

1. The employee receives vacation pay on every paycheck.
2. The employee accumulates vacation pay and receives it when taking vacation.
3. The employee accrues vacation pay and receives it as a lump sum on a specific day.

In the first scenario, the holiday pay calculation includes all of the wages earned, plus the percentage of vacation pay, usually 4%, unless the employee qualifies for a 6% vacation pay rate.

In the second scenario, vacation pay is incorporated in the holiday pay calculation only if the employee took a vacation at any time during the four-week work period.

In the third scenario, vacation pay is part of the holiday pay calculation only if the lump sum vacation payment fell within the applicable four-week period.

Public Holiday during Vacation

As outlined in the ESA’s section on vacation and public holidays, if an employee is on vacation during a public holiday, the following can occur:

1. The employee gets a substitute day off work and receives public holiday pay for that day. This day must be taken within three months of the public holiday or can be extended to 12 months if the employee consents in writing.
2. The employee can receive public holiday pay for that day without getting a substitute day off if the employee agrees electronically or in writing.

Ontario Public Holiday Pay Example

To illustrate how to compute holiday pay, let’s take an example. Consider John, who earns $15/hour, receives vacation pay on every paycheck, and his work week starts on Friday and ends on Thursday. Here’s how you would calculate his holiday pay for Canada Day, July 1st:

1. Identify the work week with the public holiday:

• Holiday week: Friday, June 26 to Thursday, July 2.

1. Calculate the total wages earned for the four work weeks prior to this week:

• Week 1: 20 hours worked x $15/hour = $300.
• Week 2: 30 hours worked x $15/hour = $450.
• Week 3: 20 hours worked x $15/hour = $300.
• Week 4: 30 hours worked x $15/hour = $450.

1. Sum the total earned during the four-week period: $1,500.
2. Calculate the total vacation payable from this period: $

Once finished, make sure to check out our year-end payroll tips to follow up and ensure compliance!

Frequently Asked Questions

Q1: What is Statutory Holiday Pay Ontario?

Statutory holiday pay in Ontario refers to the compensation that employers are required to pay their employees during public holidays. Assuming that an employee meets the eligibility criteria, they are entitled to take the public holiday off and receive additional compensation, also known as holiday pay.

Q2: How many statutory holidays are there in Ontario?

As of the cutoff of my training data in 2021, Ontario has nine statutory holidays: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day, and Boxing Day.

Q3: Who is eligible for Statutory Holiday Pay in Ontario?

Eligibility for statutory holiday pay is determined by two factors: whether your industry is covered by the Employment Standards Act (ESA) and/or any special rules, and whether the “last and first rule” applies to the employee.

Q4: What is the “Last and First Rule”?

The “last and first rule” determines if an employee qualifies for public holiday pay. According to this rule, an employee fails to qualify for holiday pay if, without reasonable cause, they fail to work their last scheduled day before the public holiday, their first scheduled day after the public holiday, or their entire shift during the public holiday if they had agreed to or were required to work.

Q5: How do you calculate Holiday Pay Ontario?

You can take advantage of our free online stat holiday calculator. Holiday pay is calculated by taking all of the wages earned (including vacation payable) by the employee in the four work weeks prior to the holiday, and dividing the total by 20, in addition to province-specific rules. This will give you the amount you need to pay for the public holiday.

Q6: How is Vacation Treated in the Stat Holiday Pay Calculation?

Vacation is included in the stat holiday pay calculation in three scenarios: when the employee gets vacation paid out on every cheque, when the employee banks vacation pay and gets it paid out when taking a vacation, and when the employee banks vacation pay and gets paid out in a lump sum on a specific day.

Q7: What happens if the Employee is on Vacation During the Public Holiday?

According to the Employment Standards Act, if an employee is on vacation during a statutory holiday, they either get a substitute day off work and get paid public holiday pay for the substitute day, or they get paid public holiday pay for that day without getting a substitute day off if the employee agrees to it electronically or in writing.